In this article we will analyze whether Norbord Inc. (NYSE:OSB) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is OSB a good stock to buy now? Norbord Inc. (NYSE:OSB) was in 13 hedge funds' portfolios at the end of September. The all time high for this statistic is 16. OSB shareholders have witnessed an increase in hedge fund sentiment lately. There were 11 hedge funds in our database with OSB holdings at the end of June. Our calculations also showed that OSB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a multitude of signals investors use to analyze stocks. A duo of the less utilized signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the top money managers can beat their index-focused peers by a significant margin (see the details here).
Michael Gelband of ExodusPoint Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind we're going to take a look at the fresh hedge fund action regarding Norbord Inc. (NYSE:OSB).
Do Hedge Funds Think OSB Is A Good Stock To Buy Now?
At third quarter's end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in OSB a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Is OSB A Good Stock To Buy?
Among these funds, Arrowstreet Capital held the most valuable stake in Norbord Inc. (NYSE:OSB), which was worth $35.6 million at the end of the third quarter. On the second spot was Mountaineer Partners Management which amassed $9.5 million worth of shares. D E Shaw, GLG Partners, and Citadel Investment Group 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 Mountaineer Partners Management allocated the biggest weight to Norbord Inc. (NYSE:OSB), around 8.18% of its 13F portfolio. Voss Capital is also relatively very bullish on the stock, setting aside 2.08 percent of its 13F equity portfolio to OSB.
As one would reasonably expect, key hedge funds were breaking ground themselves. ExodusPoint Capital, managed by Michael Gelband, established the largest position in Norbord Inc. (NYSE:OSB). ExodusPoint Capital had $4.3 million invested in the company at the end of the quarter. Travis Cocke's Voss Capital also initiated a $3.6 million position during the quarter. The other funds with brand new OSB positions are Renaissance Technologies, Peter Muller's PDT Partners, and Donald Sussman's Paloma Partners.
Let's go over hedge fund activity in other stocks similar to Norbord Inc. (NYSE:OSB). We will take a look at Commercial Metals Company (NYSE:CMC), FirstCash, Inc. (NASDAQ:FCFS), HB Fuller Co (NYSE:FUL), Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS), Tri Pointe Group Inc (NYSE:TPH), UMB Financial Corporation (NASDAQ:UMBF), and Park Hotels & Resorts Inc. (NYSE:PK). This group of stocks' market values are similar to OSB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CMC,20,103252,-2 FCFS,21,168321,-1 FUL,16,141330,6 KTOS,14,31213,-8 TPH,31,257365,0 UMBF,17,75481,2 PK,17,76710,-4 Average,19.4,121953,-1 [/table]
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 $122 million. That figure was $76 million in OSB's case. Tri Pointe Group Inc (NYSE:TPH) is the most popular stock in this table. On the other hand Kratos Defense & Security Solutions, Inc (NASDAQ:KTOS) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Norbord Inc. (NYSE:OSB) is even less popular than KTOS. Our overall hedge fund sentiment score for OSB is 31.4. 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. Hedge funds clearly dropped the ball on OSB as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on OSB as the stock returned 43.5% since Q3 (through December 8th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
