After a lengthy stretch of outperformance, small-cap stocks suffered from July 2015 through June 2016, as heightened global economic fears led investors to flee to the safe havens of large-cap stocks and other instruments. Those stocks outperformed small-caps by about 10 percentage points during that time, with small-cap healthcare stocks being particularly hard hit. However, the tide has since turned in a big way, as evidenced by small-caps toppling their large-cap peers by 5 percentage points in the third quarter, and by another 5 percentage points in the first seven weeks of the fourth quarter. In this article, we’ll analyze how this shift affected hedge funds’ Q3 trading of Oneok Partners LP (NYSE:OKS) and see how the stock is affected by the recent hedge fund activity.
Oneok Partners LP (NYSE:OKS) investors should pay attention to an increase in hedge fund sentiment in recent months. There were 7 hedge funds in our database with OKS holdings at the end of the previous quarter. At the end of this article we will also compare OKS to other stocks including Harris Corporation (NYSE:HRS), International Flavors & Fragrances Inc (NYSE:IFF), and Martin Marietta Materials, Inc. (NYSE:MLM) to get a better sense of its popularity.
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Now, let’s review the recent action regarding Oneok Partners LP (NYSE:OKS).
How are hedge funds trading Oneok Partners LP (NYSE:OKS)?
Heading into the fourth quarter of 2016, a total of 9 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OKS over the last 5 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Renaissance Technologies, one of the biggest hedge funds in the world, holds the most valuable position in Oneok Partners LP (NYSE:OKS). Renaissance Technologies has a $18.4 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is T Boone Pickens of BP Capital, with a $5.8 million position; 2.1% of its 13F portfolio is allocated to the company. Other peers that are bullish comprise William Michaelcheck’s Mariner Investment Group, and Stuart J. Zimmer’s Zimmer Partners. We should note that two of these hedge funds (BP Capital and Zimmer Partners) are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, specific money managers have been driving this bullishness. BP Capital, led by T Boone Pickens, initiated the most outsized position in Oneok Partners LP (NYSE:OKS). BP Capital had $5.8 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $1.3 million position during the quarter. The following funds were also among the new OKS investors: Stuart J. Zimmer’s Zimmer Partners and Jeff Lignelli’s Incline Global Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Oneok Partners LP (NYSE:OKS) but similarly valued. These stocks are Harris Corporation (NYSE:HRS), International Flavors & Fragrances Inc (NYSE:IFF), Martin Marietta Materials, Inc. (NYSE:MLM), and Masco Corporation (NYSE:MAS). All of these stocks’ market caps resemble OKS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HRS | 22 | 476297 | 1 |
| IFF | 16 | 269994 | -4 |
| MLM | 35 | 1223233 | -2 |
| MAS | 38 | 1212193 | 5 |
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $795 million. That figure was $34 million in OKS’s case. Masco Corporation (NYSE:MAS) is the most popular stock in this table. On the other hand International Flavors & Fragrances Inc (NYSE:IFF) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Oneok Partners LP (NYSE:OKS) is even less popular than IFF. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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