Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don't make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards OneWater Marine Inc. (NASDAQ:ONEW) to find out whether there were any major changes in hedge funds' views.
Is OneWater Marine Inc. (NASDAQ:ONEW) a buy right now? Investors who are in the know were in an optimistic mood. The number of bullish hedge fund bets increased by 6 in recent months. OneWater Marine Inc. (NASDAQ:ONEW) was in 11 hedge funds' portfolios at the end of September. The all time high for this statistics is 6. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ONEW 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Richard Driehaus of Driehaus 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. Now let's take a peek at the latest hedge fund action encompassing OneWater Marine Inc. (NASDAQ:ONEW).
Do Hedge Funds Think ONEW Is A Good Stock To Buy Now?
At third quarter's end, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 120% from the second quarter of 2020. On the other hand, there were a total of 0 hedge funds with a bullish position in ONEW a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of OneWater Marine Inc. (NASDAQ:ONEW), with a stake worth $16.1 million reported as of the end of September. Trailing Royce & Associates was Driehaus Capital, which amassed a stake valued at $7.8 million. Marshall Wace LLP, Millennium Management, and Renaissance Technologies 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 Manatuck Hill Partners allocated the biggest weight to OneWater Marine Inc. (NASDAQ:ONEW), around 0.52% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.17 percent of its 13F equity portfolio to ONEW.
Consequently, key money managers have jumped into OneWater Marine Inc. (NASDAQ:ONEW) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, assembled the biggest position in OneWater Marine Inc. (NASDAQ:ONEW). Marshall Wace LLP had $5.8 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also initiated a $4.3 million position during the quarter. The other funds with brand new ONEW positions are Daniel Johnson's Gillson Capital, Greg Eisner's Engineers Gate Manager, and Ken Griffin's Citadel Investment Group.
Let's go over hedge fund activity in other stocks similar to OneWater Marine Inc. (NASDAQ:ONEW). These stocks are Del Taco Restaurants Inc (NASDAQ:TACO), Ares Commercial Real Estate Corp (NYSE:ACRE), Noodles & Co (NASDAQ:NDLS), Oxford Immunotec Global PLC (NASDAQ:OXFD), GTT Communications Inc (NYSE:GTT), Innate Pharma S.A. (NASDAQ:IPHA), and Griffin Industrial Realty, Inc. (NASDAQ:GRIF). This group of stocks' market values match ONEW's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TACO,15,21195,3 ACRE,9,24591,-1 NDLS,19,67028,1 OXFD,20,136176,2 GTT,9,87069,0 IPHA,2,1248,-1 GRIF,4,38978,0 Average,11.1,53755,0.6 [/table]
As you can see these stocks had an average of 11.1 hedge funds with bullish positions and the average amount invested in these stocks was $54 million. That figure was $39 million in ONEW's case. Oxford Immunotec Global PLC (NASDAQ:OXFD) is the most popular stock in this table. On the other hand Innate Pharma S.A. (NASDAQ:IPHA) is the least popular one with only 2 bullish hedge fund positions. OneWater Marine Inc. (NASDAQ:ONEW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ONEW is 65. 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. 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 ONEW as the stock returned 38.7% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
Get real-time email alerts: Follow Onewater Marine Inc. (NASDAQ:ONEW)
Disclosure: None. This article was originally published at Insider Monkey.
