Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) investors should pay attention to an increase in support from the world’s most elite money managers recently. OLLI was in 22 hedge funds’ portfolios at the end of the third quarter of 2016. There were 19 hedge funds in our database with OLLI holdings at the end of the previous quarter. At the end of this article we will also compare OLLI to other stocks including The Empire District Electric Company (NYSE:EDE), WMS Industries Inc. (NYSE:WMS), and Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Hedge fund activity in Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI)
At Q3’s end, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 16% increase from one quarter earlier. Hedge fund ownership of the stock is now up by over 150% in the last three quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Paul Marshall and Ian Wace’s Marshall Wace LLP has the largest position in Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), worth close to $59.6 million. The second largest stake is held by Citadel Investment Group, led by Ken Griffin, holding a $33.3 million position. Some other peers with similar optimism encompass Matthew A. Weatherbie’s Weatherbie Capital, Paul Reeder and Edward Shapiro’s PAR Capital Management, and Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital.
Now, key hedge funds were leading the bulls’ herd. Waratah Capital Advisors, managed by Brad Dunkley and Blair Levinsky, initiated the largest position in Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI). Waratah Capital Advisors had $3.6 million invested in the company at the end of the quarter. Leon Cooperman’s Omega Advisors also made a $2.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Sander Gerber’s Hudson Bay Capital Management, John Tompkins’ Tyvor Capital, and Michael Platt and William Reeves’ BlueCrest Capital Mgmt.
Let’s check out hedge fund activity in other stocks similar to Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI). We will take a look at The Empire District Electric Company (NYSE:EDE), WMS Industries Inc. (NYSE:WMS), Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX), and Pennsylvania R.E.I.T. (NYSE:PEI). This group of stocks’ market values resemble OLLI’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $183 million in OLLI’s case. Lexicon Pharmaceuticals, Inc. (NASDAQ:LXRX) is the most popular stock in this table. On the other hand The Empire District Electric Company (NYSE:EDE) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.