Is Office Depot Inc (NASDAQ:ODP) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They fail miserably sometimes, but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
Office Depot Inc (NASDAQ:ODP) investors should pay attention to a decrease in enthusiasm from smart money lately. ODP was in 47 hedge funds’ portfolios at the end of the third quarter of 2015. There were 49 hedge funds in our database with ODP positions at the end of the previous quarter. At the end of this article we will also compare ODP to other stocks including Clovis Oncology Inc (NASDAQ:CLVS), Rackspace Hosting, Inc. (NYSE:RAX), and Blue Buffalo Pet Products Inc (NASDAQ:BUFF) to get a better sense of its popularity.
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In the eyes of most shareholders, hedge funds are seen as slow, old investment tools of the past. While there are greater than 8000 funds trading today, Our researchers look at the upper echelon of this group, about 700 funds. These hedge fund managers direct bulk of all hedge funds’ total asset base, and by paying attention to their top picks, Insider Monkey has formulated numerous investment strategies that have historically exceeded the market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, we’re going to take a peek at the fresh action regarding Office Depot Inc (NASDAQ:ODP).
What does the smart money think about Office Depot Inc (NASDAQ:ODP)?
At the Q3’s end, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Starboard Value LP, managed by Jeffrey Smith, holds the largest position in Office Depot Inc (NASDAQ:ODP). Starboard Value LP has a $287.2 million position in the stock, comprising 6.4% of its 13F portfolio. The second largest stake is held by Canyon Capital Advisors, led by Joshua Friedman and Mitchell Julis, holding a $90.4 million position; the fund has 2.5% of its 13F portfolio invested in the stock. Other professional money managers that are bullish include Eric Mindich’s Eton Park Capital, Paul Singer’s Elliott Management and Daniel S. Och’s OZ Management.
Seeing as Office Depot Inc (NASDAQ:ODP) has experienced a falling interest from the aggregate hedge fund industry, we can see that there was a specific group of money managers that elected to cut their full holdings last quarter. At the top of the heap, Richard Perry’s Perry Capital cut the largest stake of the 700 funds watched by Insider Monkey, comprising close to $34.3 million in stock, and Marc Majzner’s Clearline Capital was right behind this move, as the fund said goodbye to about $23.2 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Office Depot Inc (NASDAQ:ODP) but similarly valued. We will take a look at Clovis Oncology Inc (NASDAQ:CLVS), Rackspace Hosting, Inc. (NYSE:RAX), Blue Buffalo Pet Products Inc (NASDAQ:BUFF), and HEALTHSOUTH Corp. (NYSE:HLS). All of these stocks’ market caps match ODP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLVS | 31 | 1216090 | 2 |
| RAX | 30 | 614200 | -7 |
| BUFF | 24 | 153784 | 24 |
| HLS | 22 | 471224 | -3 |
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $614 million, versus $965 million in ODP’s case. Clovis Oncology Inc (NASDAQ:CLVS) is the most popular stock in this table with 31 funds reporting long positions. On the other hand HEALTHSOUTH Corp. (NYSE:HLS) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Office Depot Inc (NASDAQ:ODP) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
