Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about O-I Glass, Inc. (NYSE:OI) in this article.
Is O-I Glass, Inc. (NYSE:OI) a bargain? Investors who are in the know were betting on the stock. The number of long hedge fund positions improved by 1 lately. O-I Glass, Inc. (NYSE:OI) was in 24 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that OI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 23 hedge funds in our database with OI positions at the end of the first quarter.
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
David Abrams of Abrams Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Now let's review the latest hedge fund action regarding O-I Glass, Inc. (NYSE:OI).
At second quarter's end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. On the other hand, there were a total of 25 hedge funds with a bullish position in OI a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Abrams Capital Management held the most valuable stake in O-I Glass, Inc. (NYSE:OI), which was worth $113.2 million at the end of the second quarter. On the second spot was Lyrical Asset Management which amassed $97.3 million worth of shares. Arrowstreet Capital, Atlantic Investment Management, and AQR Capital 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 3.36% of its 13F portfolio. Abrams Capital Management is also relatively very bullish on the stock, designating 2.52 percent of its 13F equity portfolio to OI.
As one would reasonably expect, key hedge funds were breaking ground themselves. Capital Growth Management, managed by Ken Heebner, initiated the largest position in O-I Glass, Inc. (NYSE:OI). Capital Growth Management had $9.8 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $3.4 million position during the quarter. The other funds with new positions in the stock are John Brennan's Sirios Capital Management, Jinghua Yan's TwinBeech Capital, and Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.
Let's now review 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 Veoneer, Inc. (NYSE:VNE), First Bancorp (NYSE:FBP), Corcept Therapeutics Incorporated (NASDAQ:CORT), Fulton Financial Corp (NASDAQ:FULT), Amicus Therapeutics, Inc. (NASDAQ:FOLD), BRP Group, Inc. (NASDAQ:BRP), and Domo Inc. (NASDAQ:DOMO). This group of stocks' market values are closest to OI's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position VNE,12,202058,-1 FBP,25,262617,0 CORT,16,228896,1 FULT,11,30133,4 FOLD,34,832552,4 BRP,13,108357,1 DOMO,25,354186,-2 Average,19.4,288400,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $288 million. That figure was $310 million in OI's case. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is the most popular stock in this table. On the other hand Fulton Financial Corp (NASDAQ:FULT) is the least popular one with only 11 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. Our overall hedge fund sentiment score for OI is 58.3. 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 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately OI wasn't nearly as popular as these 5 stocks and hedge funds that were betting on OI were disappointed as the stock returned -12.4% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
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