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Hedge Funds Are Abandoning Opera Limited (OPRA)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Opera Limited (NASDAQ:OPRA).

Opera Limited (NASDAQ:OPRA) was in 6 hedge funds’ portfolios at the end of March. OPRA investors should pay attention to a decrease in enthusiasm from smart money in recent months. There were 15 hedge funds in our database with OPRA positions at the end of the previous quarter. Our calculations also showed that OPRA isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 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 58 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.

Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a gander at the recent hedge fund action regarding Opera Limited (NASDAQ:OPRA).

What does smart money think about Opera Limited (NASDAQ:OPRA)?

At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -60% from the previous quarter. On the other hand, there were a total of 5 hedge funds with a bullish position in OPRA a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Is OPRA A Good Stock To Buy?

Among these funds, Blue Grotto Capital held the most valuable stake in Opera Limited (NASDAQ:OPRA), which was worth $2.8 million at the end of the third quarter. On the second spot was Millennium Management which amassed $1.2 million worth of shares. Citadel Investment Group, Renaissance Technologies, and Ellington 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 Blue Grotto Capital allocated the biggest weight to Opera Limited (NASDAQ:OPRA), around 2.02% of its 13F portfolio. Ellington is also relatively very bullish on the stock, designating 0.04 percent of its 13F equity portfolio to OPRA.

Since Opera Limited (NASDAQ:OPRA) has faced a decline in interest from hedge fund managers, it’s easy to see that there is a sect of funds that slashed their full holdings heading into Q4. At the top of the heap, Peter S. Park’s Park West Asset Management sold off the biggest investment of all the hedgies followed by Insider Monkey, comprising about $9.5 million in stock, and Hugh Sloane’s Sloane Robinson Investment Management was right behind this move, as the fund dumped about $2.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 9 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Opera Limited (NASDAQ:OPRA) but similarly valued. These stocks are Maxar Technologies Ltd. (NYSE:MAXR), CryoPort, Inc. (NASDAQ:CYRX), Arcus Biosciences, Inc. (NYSE:RCUS), and Washington Trust Bancorp (NASDAQ:WASH). All of these stocks’ market caps resemble OPRA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MAXR 16 65956 3
CYRX 9 48542 1
RCUS 23 51869 8
WASH 7 21341 2
Average 13.75 46927 3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $5 million in OPRA’s case. Arcus Biosciences, Inc. (NYSE:RCUS) is the most popular stock in this table. On the other hand Washington Trust Bancorp (NASDAQ:WASH) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Opera Limited (NASDAQ:OPRA) is even less popular than WASH. Hedge funds clearly dropped the ball on OPRA as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on OPRA as the stock returned 34.8% so far in the second quarter and outperformed the market by an even larger margin.

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