While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Owens Corning (NYSE:OC).
Is Owens Corning (NYSE:OC) a good stock to buy now? Prominent investors were getting less optimistic. The number of long hedge fund bets decreased by 10 lately. Owens Corning (NYSE:OC) was in 24 hedge funds’ portfolios at the end of September. The all time high for this statistic is 47. Our calculations also showed that OC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Noam Gottesman of GLG Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now we’re going to take a look at the fresh hedge fund action regarding Owens Corning (NYSE:OC).
Do Hedge Funds Think OC Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OC over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Owens Corning (NYSE:OC), with a stake worth $95.4 million reported as of the end of September. Trailing AQR Capital Management was Citadel Investment Group, which amassed a stake valued at $72.7 million. GLG Partners, Renaissance Technologies, and Millennium Management were 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 Levin Easterly Partners allocated the biggest weight to Owens Corning (NYSE:OC), around 2.39% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, designating 1.71 percent of its 13F equity portfolio to OC.
Because Owens Corning (NYSE:OC) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedgies that decided to sell off their full holdings last quarter. It’s worth mentioning that Gregg Moskowitz’s Interval Partners dumped the biggest investment of the “upper crust” of funds watched by Insider Monkey, totaling an estimated $5.2 million in call options, and Gregg Moskowitz’s Interval Partners was right behind this move, as the fund cut about $2.9 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 10 funds last quarter.
Let’s go over hedge fund activity in other stocks similar to Owens Corning (NYSE:OC). We will take a look at Lattice Semiconductor Corporation (NASDAQ:LSCC), Thoughtworks Holding Inc. (NASDAQ:TWKS), AutoNation, Inc. (NYSE:AN), Store Capital Corporation (NYSE:STOR), Cabot Oil & Gas Corporation (NYSE:COG), Braskem SA (NYSE:BAK), and Smartsheet Inc. (NYSE:SMAR). This group of stocks’ market valuations match OC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LSCC | 19 | 366512 | -5 |
| TWKS | 20 | 235543 | 20 |
| AN | 29 | 680901 | 5 |
| STOR | 16 | 857066 | 3 |
| COG | 29 | 559497 | 4 |
| BAK | 8 | 18606 | 2 |
| SMAR | 50 | 1378238 | 1 |
| Average | 24.4 | 585195 | 4.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $585 million. That figure was $454 million in OC’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand Braskem SA (NYSE:BAK) is the least popular one with only 8 bullish hedge fund positions. Owens Corning (NYSE:OC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OC is 29.4. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on OC as the stock returned 9.4% since the end of the third quarter (through 12/9) and outperformed the market by an even larger margin.
Follow Owens Corning (NYSE:OC)
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Disclosure: None. This article was originally published at Insider Monkey.
