5 Best New Penny Stocks to Buy Now

4. Olaplex Holdings, Inc. (NASDAQ:OLPX)

Number of Hedge Fund Holders: 15

Hair care products company Olaplex Holdings, Inc. (NASDAQ:OLPX) went public in 2021. Olaplex Holdings, Inc. (NASDAQ:OLPX) got a valuation of about $15 billion at the time of its IPO. However, it failed to maintain investors’ interest and Olaplex Holdings, Inc. (NASDAQ:OLPX) is down about 80% over the past one year. Earlier in August Olaplex Holdings, Inc. (NASDAQ:OLPX) posted weak Q2 results. Adjusted EPS in the quarter came in at $0.03 missing estimates by $0.02. Revenue in the quarter fell 48.2% YoY to $109.24 million.

Nonetheless, 15 hedge funds in Insider Monkey’s database of 943 hedge funds had stakes in Olaplex Holdings, Inc. (NASDAQ:OLPX) at the end of the first quarter. The biggest stakeholder of Olaplex Holdings, Inc. (NASDAQ:OLPX) was Cliff Asness’s AQR Capital Management which owns a $20.1 million stake in the company.

Polen U.S. Small Company made the following comment about Olaplex Holdings, Inc. (NASDAQ:OLPX) in its Q1 2023 investor letter:

“We exited three positions during the quarter: Duck Creek Technologies, Azenta, and Olaplex Holdings, Inc. (NASDAQ:OLPX). We believe Olaplex highlights our willingness to change our mind when information changes, even with a new position. Olaplex is a highly profitable and uniquely positioned prestige beauty brand focused on science-based hair care. When we first invested in Olaplex in the fourth quarter of last year, it was on the back of the stock re-rating lower as revenue growth decelerated from rapid growth to a more sustainable growth rate. We felt this re-rating represented a significant discount on the stock’s long-term potential. In the short time since we became owners, a tail risk emerged related to a claim that the products cause hair loss and damage. At worst, this presents an existential threat to the business and, in the best-case scenario, makes everything that they are trying to do today a lot harder. No longer comfortable with the significantly widened range of potential outcomes, we eliminated the position as we have investment alternatives of equal or better reward today with meaningfully less risk. While it is unusual for us to exit positions so quickly, sometimes this is necessary. Not only is it important to be open to changing one’s mind quickly as new risks emerge—it is essential to protecting and preserving our clients’ capital.”