We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Owens-Illinois Inc (NYSE:OI), and what that likely means for the prospects of the company and its stock.
Owens-Illinois Inc (NYSE:OI) was in 25 hedge funds’ portfolios at the end of September. OI investors should be aware of a decrease in support from the world’s most elite money managers lately. There were 27 hedge funds in our database with OI positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Cimpress NV (NASDAQ:CMPR), Intrexon Corp (NYSE:XON), and Landstar System, Inc. (NASDAQ:LSTR) to gather more data points.
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Keeping this in mind, we’re going to take a glance at the new action regarding Owens-Illinois Inc (NYSE:OI).
How have hedgies been trading Owens-Illinois Inc (NYSE:OI)?
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 7% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Atlantic Investment Management, run by Alexander Roepers, holds the largest position in Owens-Illinois Inc (NYSE:OI). According to regulatory filings, the fund has a $181 million position in the stock, comprising 23.6% of its 13F portfolio. Sitting at the No. 2 spot is Robert Rodriguez and Steven Romick of First Pacific Advisors LLC, with a $179.7 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Remaining peers with similar optimism contain William B. Gray’s Orbis Investment Management, John Osterweis’s Osterweis Capital Management and Ken Griffin’s Citadel Investment Group.
Judging by the fact that Owens-Illinois Inc (NYSE:OI) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s easy to see that there were a few hedge funds that decided to sell off their entire stakes heading into Q4. At the top of the heap, Jeffrey Moskowitz’s Harvey Partners dumped the biggest position of the 700 funds watched by Insider Monkey, worth close to $2.1 million in call options. Ken Griffin’s fund, Citadel Investment Group, also dumped its call options, worth about $0.9 million. These moves are important to note, as aggregate hedge fund interest fell by 2 funds heading into Q4.
Let’s go over hedge fund activity in other stocks similar to Owens-Illinois Inc (NYSE:OI). These stocks are Cimpress NV (NASDAQ:CMPR), Intrexon Corp (NYSE:XON), Landstar System, Inc. (NASDAQ:LSTR), and Vista Outdoor Inc (NYSE:VSTO). This group of stocks’ market caps resemble OI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CMPR | 15 | 711157 | -1 |
| XON | 10 | 157865 | -6 |
| LSTR | 17 | 179246 | 1 |
| VSTO | 21 | 342497 | -6 |
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 $348 million. That figure was $689 million in OI’s case. Vista Outdoor Inc (NYSE:VSTO) is the most popular stock in this table. On the other hand Intrexon Corp (NYSE:XON) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Owens-Illinois Inc (NYSE:OI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: none.
