Is OSH Stock A Buy or Sell?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Oak Street Health, Inc. (NYSE:OSH).

Is OSH stock a buy? Oak Street Health, Inc. (NYSE:OSH) has seen an increase in hedge fund sentiment recently. Oak Street Health, Inc. (NYSE:OSH) was in 34 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 22. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that OSH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

James E. Flynn of Deerfield Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 website. Now we’re going to analyze the new hedge fund action surrounding Oak Street Health, Inc. (NYSE:OSH).

Do Hedge Funds Think OSH Is A Good Stock To Buy Now?

Heading into the first quarter of 2021, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 55% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OSH over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeremy Green’s Redmile Group has the biggest position in Oak Street Health, Inc. (NYSE:OSH), worth close to $178.9 million, comprising 2.2% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $125 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining professional money managers that are bullish consist of James E. Flynn’s Deerfield Management, Alok Agrawal’s Bloom Tree Partners and William Duhamel’s Route One Investment Company. In terms of the portfolio weights assigned to each position Bloom Tree Partners allocated the biggest weight to Oak Street Health, Inc. (NYSE:OSH), around 3.1% of its 13F portfolio. Redmile Group is also relatively very bullish on the stock, dishing out 2.17 percent of its 13F equity portfolio to OSH.

Consequently, key money managers have jumped into Oak Street Health, Inc. (NYSE:OSH) headfirst. Woodline Partners, managed by Michael Rockefeller and Karl Kroeker, initiated the most outsized position in Oak Street Health, Inc. (NYSE:OSH). Woodline Partners had $21.9 million invested in the company at the end of the quarter. Jerome Pfund and Michael Sjostrom’s Sectoral Asset Management also made a $15.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Christopher James’s Partner Fund Management, and Matthew L Pinz’s Pinz Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Oak Street Health, Inc. (NYSE:OSH). These stocks are Boston Properties, Inc. (NYSE:BXP), ABIOMED, Inc. (NASDAQ:ABMD), Campbell Soup Company (NYSE:CPB), Arch Capital Group Ltd. (NASDAQ:ACGL), Brookfield Infrastructure Partners L.P. (NYSE:BIP), Genuine Parts Company (NYSE:GPC), and Mid America Apartment Communities Inc (NYSE:MAA). This group of stocks’ market valuations are closest to OSH’s market valuation.

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As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $518 million. That figure was $657 million in OSH’s case. Arch Capital Group Ltd. (NASDAQ:ACGL) is the most popular stock in this table. On the other hand Brookfield Infrastructure Partners L.P. (NYSE:BIP) is the least popular one with only 14 bullish hedge fund positions. Oak Street Health, Inc. (NYSE:OSH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OSH is 90. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately OSH wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on OSH were disappointed as the stock returned -7.1% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.