Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is OFS Capital Corp (NASDAQ:OFS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is OFS a good stock to buy? Investors who are in the know were taking a bullish view. The number of long hedge fund positions increased by 1 recently. OFS Capital Corp (NASDAQ:OFS) was in 3 hedge funds’ portfolios at the end of March. The all time high for this statistic is 5. Our calculations also showed that OFS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 2 hedge funds in our database with OFS positions at the end of the fourth quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Ken Griffin of Citadel Investment Group
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s check out the fresh hedge fund action encompassing OFS Capital Corp (NASDAQ:OFS).
Do Hedge Funds Think OFS Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards OFS over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Arrowstreet Capital was the largest shareholder of OFS Capital Corp (NASDAQ:OFS), with a stake worth $0.2 million reported as of the end of March. Trailing Arrowstreet Capital was Millennium Management, which amassed a stake valued at $0.2 million. Citadel Investment Group was also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Arrowstreet Capital allocated the biggest weight to OFS Capital Corp (NASDAQ:OFS), around 0.0003% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, dishing out 0.0001 percent of its 13F equity portfolio to OFS.
As industrywide interest jumped, key hedge funds have jumped into OFS Capital Corp (NASDAQ:OFS) headfirst. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in OFS Capital Corp (NASDAQ:OFS). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as OFS Capital Corp (NASDAQ:OFS) but similarly valued. We will take a look at Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS), Prudential Bancorp, Inc. (NASDAQ:PBIP), One Stop Systems, Inc. (NASDAQ:OSS), Liquidia Corporation (NASDAQ:LQDA), Graybug Vision, Inc. (NASDAQ:GRAY), Moleculin Biotech, Inc. (NASDAQ:MBRX), and La Jolla Pharmaceutical Company (NASDAQ:LJPC). This group of stocks’ market values are similar to OFS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRVS | 11 | 50567 | 5 |
| PBIP | 1 | 5992 | -1 |
| OSS | 3 | 505 | 0 |
| LQDA | 7 | 8134 | 0 |
| GRAY | 3 | 52560 | -2 |
| MBRX | 2 | 3985 | 1 |
| LJPC | 9 | 45393 | 3 |
| Average | 5.1 | 23877 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 5.1 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $0 million in OFS’s case. Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS) is the most popular stock in this table. On the other hand Prudential Bancorp, Inc. (NASDAQ:PBIP) is the least popular one with only 1 bullish hedge fund positions. OFS Capital Corp (NASDAQ:OFS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OFS is 34. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on OFS as the stock returned 12.2% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.
Follow Ofs Capital Corp (NASDAQ:OFS)
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Disclosure: None. This article was originally published at Insider Monkey.
