Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds and investors’ positions as of the end of the third quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of ONE Gas Inc (NYSE:OGS) based on that data.
Is ONE Gas Inc (NYSE:OGS) a healthy stock for your portfolio? The best stock pickers are becoming more confident. The number of bullish hedge fund positions improved by 1 in recent months. Our calculations also showed that ogs isn’t among the 30 most popular stocks among hedge funds. OGS was in 15 hedge funds’ portfolios at the end of the third quarter of 2018. There were 14 hedge funds in our database with OGS holdings at the end of the previous 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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Cliff Asness of AQR Capital Management
Let’s view the recent hedge fund action regarding ONE Gas Inc (NYSE:OGS).
How are hedge funds trading ONE Gas Inc (NYSE:OGS)?
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OGS over the last 13 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in ONE Gas Inc (NYSE:OGS), which was worth $20.9 million at the end of the third quarter. On the second spot was AQR Capital Management which amassed $17.6 million worth of shares. Moreover, Renaissance Technologies, Arrowstreet Capital, and GLG Partners were also bullish on ONE Gas Inc (NYSE:OGS), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, some big names were leading the bulls’ herd. Impax Asset Management, managed by Ian Simm, initiated the largest position in ONE Gas Inc (NYSE:OGS). Impax Asset Management had $20.9 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $3.3 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, John Overdeck and David Siegel’s Two Sigma Advisors, and Matthew Tewksbury’s Stevens Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ONE Gas Inc (NYSE:OGS) but similarly valued. These stocks are Pluralsight, Inc. (NASDAQ:PS), Wyndham Destinations, Inc. (NYSE:WYND), Hutchison China MediTech Limited (NASDAQ:HCM), and Colfax Corporation (NYSE:CFX). This group of stocks’ market valuations resemble OGS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PS | 13 | 137671 | -3 |
| WYND | 22 | 606708 | -7 |
| HCM | 9 | 13734 | -1 |
| CFX | 20 | 385780 | 3 |
| Average | 16 | 285973 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $286 million. That figure was $89 million in OGS’s case. Wyndham Destinations, Inc. (NYSE:WYND) is the most popular stock in this table. On the other hand Hutchison China MediTech Limited (NASDAQ:HCM) is the least popular one with only 9 bullish hedge fund positions. ONE Gas Inc (NYSE:OGS) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WYND might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
