Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Oshkosh Corporation (NYSE:OSK).
Oshkosh Corporation (NYSE:OSK) shareholders have witnessed an increase in hedge fund sentiment of late. Our calculations also showed that OSK isn’t among the 30 most popular stocks among hedge funds.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Cliff Asness of AQR Capital Management
We’re going to check out the recent hedge fund action encompassing Oshkosh Corporation (NYSE:OSK).
Hedge fund activity in Oshkosh Corporation (NYSE:OSK)
Heading into the fourth quarter of 2018, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from one quarter earlier. By comparison, 28 hedge funds held shares or bullish call options in OSK heading into this year. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Oshkosh Corporation (NYSE:OSK), with a stake worth $155.2 million reported as of the end of September. Trailing AQR Capital Management was Millennium Management, which amassed a stake valued at $51.3 million. Citadel Investment Group, Anchor Bolt Capital, and Lodge Hill Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Gotham Asset Management, managed by Joel Greenblatt, assembled the most valuable position in Oshkosh Corporation (NYSE:OSK). Gotham Asset Management had $12.5 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $12.4 million position during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Matthew Tewksbury’s Stevens Capital Management.
Let’s check out hedge fund activity in other stocks similar to Oshkosh Corporation (NYSE:OSK). We will take a look at Viper Energy Partners LP (NASDAQ:VNOM), Loxo Oncology Inc (NASDAQ:LOXO), Primerica, Inc. (NYSE:PRI), and Avnet, Inc. (NYSE:AVT). This group of stocks’ market valuations are similar to OSK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VNOM | 12 | 139992 | 2 |
| LOXO | 30 | 909394 | -2 |
| PRI | 12 | 467230 | 3 |
| AVT | 23 | 802892 | 7 |
| Average | 19.25 | 579877 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $580 million. That figure was $448 million in OSK’s case. Loxo Oncology Inc (NASDAQ:LOXO) is the most popular stock in this table. On the other hand Viper Energy Partners LP (NASDAQ:VNOM) is the least popular one with only 12 bullish hedge fund positions. Oshkosh Corporation (NYSE:OSK) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LOXO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
