Is Universal Display Corporation (OLED) A Good Stock To Buy?

Nina Todic

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Universal Display Corporation (NASDAQ:OLED), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Universal Display Corporation (NASDAQ:OLED) a worthy stock to buy now? The smart money is in an optimistic mood. The number of bullish hedge fund bets improved by 8 lately. Our calculations also showed that oled isn't among the 30 most popular stocks among hedge funds. OLED was in 18 hedge funds' portfolios at the end of March. There were 10 hedge funds in our database with OLED holdings at the end of the previous quarter.

Why do we pay any attention at all to hedge fund sentiment? 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 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

D. E. Shaw

Let's take a gander at the recent hedge fund action encompassing Universal Display Corporation (NASDAQ:OLED).

What does the smart money think about Universal Display Corporation (NASDAQ:OLED)?

At Q1's end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 80% from the fourth quarter of 2018. By comparison, 24 hedge funds held shares or bullish call options in OLED a year ago. With hedgies' capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

No of Hedge Funds with OLED Positions

More specifically, Polar Capital was the largest shareholder of Universal Display Corporation (NASDAQ:OLED), with a stake worth $48.7 million reported as of the end of March. Trailing Polar Capital was Citadel Investment Group, which amassed a stake valued at $47.9 million. Kayak Investment Partners, D E Shaw, and Highbridge Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Kayak Investment Partners, managed by Daryl Smith, initiated the biggest position in Universal Display Corporation (NASDAQ:OLED). Kayak Investment Partners had $20.9 million invested in the company at the end of the quarter. Glenn Russell Dubin's Highbridge Capital Management also initiated a $12.3 million position during the quarter. The other funds with brand new OLED positions are David Harding's Winton Capital Management, Larry Chen and Terry Zhang's Tairen Capital, and Israel Englander's Millennium Management.

Let's go over hedge fund activity in other stocks similar to Universal Display Corporation (NASDAQ:OLED). We will take a look at Sealed Air Corporation (NYSE:SEE), Liberty Property Trust (NYSE:LPT), Exelixis, Inc. (NASDAQ:EXEL), and Mobile TeleSystems Public Joint Stock Company. (NYSE:MBT). This group of stocks' market values are closest to OLED's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SEE,29,1118989,-2 LPT,19,215440,0 EXEL,24,788343,0 MBT,13,321821,1 Average,21.25,611148,-0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $611 million. That figure was $133 million in OLED's case. Sealed Air Corporation (NYSE:SEE) is the most popular stock in this table. On the other hand Mobile TeleSystems Public Joint Stock Company. (NYSE:MBT) is the least popular one with only 13 bullish hedge fund positions. Universal Display Corporation (NASDAQ:OLED) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately OLED wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); OLED investors were disappointed as the stock returned -2.3% 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 13 of these stocks already outperformed the market so far in Q2.

Disclosure: None. This article was originally published at Insider Monkey.

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