We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of O-I Glass, Inc. (NYSE:OI) based on that data.
O-I Glass, Inc. (NYSE:OI) investors should be aware of a decrease in hedge fund interest lately. Our calculations also showed that OI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 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 more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Abrams of Abrams Capital Management
Now let’s take a look at the new hedge fund action encompassing O-I Glass, Inc. (NYSE:OI).
What have hedge funds been doing with O-I Glass, Inc. (NYSE:OI)?
Heading into the first quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OI over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, First Pacific Advisors LLC held the most valuable stake in O-I Glass, Inc. (NYSE:OI), which was worth $119.3 million at the end of the third quarter. On the second spot was Atlantic Investment Management which amassed $94.3 million worth of shares. Lyrical Asset Management, Abrams Capital Management, and Hawk Ridge 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 Atlantic Investment Management allocated the biggest weight to O-I Glass, Inc. (NYSE:OI), around 27.91% of its 13F portfolio. Hawk Ridge Management is also relatively very bullish on the stock, setting aside 7.41 percent of its 13F equity portfolio to OI.
Due to the fact that O-I Glass, Inc. (NYSE:OI) has experienced declining sentiment from the aggregate hedge fund industry, we can see that there exists a select few hedge funds that slashed their positions entirely last quarter. It’s worth mentioning that Jerome L. Simon’s Lonestar Capital Management dropped the biggest investment of the 750 funds monitored by Insider Monkey, worth close to $9.2 million in stock, and Julian Allen’s Spitfire Capital was right behind this move, as the fund dropped about $4.8 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 4 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as O-I Glass, Inc. (NYSE:OI) but similarly valued. These stocks are Axos Financial, Inc. (NYSE:AX), Jack in the Box Inc. (NASDAQ:JACK), OSI Systems, Inc. (NASDAQ:OSIS), and Silicon Motion Technology Corp. (NASDAQ:SIMO). 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 |
|---|---|---|---|
| AX | 15 | 70849 | 0 |
| JACK | 26 | 288965 | -4 |
| OSIS | 20 | 90282 | -5 |
| SIMO | 17 | 281949 | 2 |
| Average | 19.5 | 183011 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $183 million. That figure was $505 million in OI’s case. Jack in the Box Inc. (NASDAQ:JACK) is the most popular stock in this table. On the other hand Axos Financial, Inc. (NYSE:AX) is the least popular one with only 15 bullish hedge fund positions. O-I Glass, Inc. (NYSE:OI) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately OI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on OI were disappointed as the stock returned -45.7% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
