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Hedge Funds Aren’t Crazy About Orion Marine Group, Inc. (ORN) Anymore

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Orion Marine Group, Inc. (NYSE:ORN).

Orion Marine Group, Inc. (NYSE:ORN) was in 7 hedge funds’ portfolios at the end of March. ORN has seen a decrease in hedge fund sentiment lately. There were 13 hedge funds in our database with ORN positions at the end of the previous quarter. Our calculations also showed that ORN 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

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. With all of this in mind we’re going to take a glance at the fresh hedge fund action encompassing Orion Marine Group, Inc. (NYSE:ORN).

How are hedge funds trading Orion Marine Group, Inc. (NYSE:ORN)?

At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -46% from the previous quarter. By comparison, 5 hedge funds held shares or bullish call options in ORN a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is ORN A Good Stock To Buy?

The largest stake in Orion Marine Group, Inc. (NYSE:ORN) was held by Renaissance Technologies, which reported holding $2.4 million worth of stock at the end of September. It was followed by D E Shaw with a $1.3 million position. Other investors bullish on the company included Millennium Management, Ancora Advisors, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Orion Marine Group, Inc. (NYSE:ORN), around 0.03% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0024 percent of its 13F equity portfolio to ORN.

Because Orion Marine Group, Inc. (NYSE:ORN) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few hedge funds that elected to cut their entire stakes last quarter. It’s worth mentioning that Bradley Louis Radoff’s Fondren Management dumped the biggest position of the 750 funds tracked by Insider Monkey, totaling about $0.4 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund cut about $0.3 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 6 funds last quarter.

Let’s go over hedge fund activity in other stocks similar to Orion Marine Group, Inc. (NYSE:ORN). These stocks are Globe Specialty Metals, Inc. (NASDAQ:GSM), Park City Group, Inc. (NYSE:PCYG), Briggs & Stratton Corporation (NYSE:BGG), and Clearside Biomedical, Inc. (NASDAQ:CLSD). This group of stocks’ market caps are similar to ORN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GSM 11 10265 4
PCYG 2 483 -1
BGG 4 5425 -4
CLSD 4 944 1
Average 5.25 4279 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $6 million in ORN’s case. Globe Specialty Metals, Inc. (NASDAQ:GSM) is the most popular stock in this table. On the other hand Park City Group, Inc. (NYSE:PCYG) is the least popular one with only 2 bullish hedge fund positions. Orion Marine Group, Inc. (NYSE:ORN) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 but beat the market by 14.2 percentage points. Unfortunately ORN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ORN were disappointed as the stock returned 9.6% 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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