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Hedge Funds Have Never Been More Bullish On Old Republic International (ORI)

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Old Republic International Corporation (NYSE:ORI).

Old Republic International Corporation (NYSE:ORI) has experienced an increase in hedge fund sentiment lately. ORI was in 27 hedge funds’ portfolios at the end of March. There were 20 hedge funds in our database with ORI positions at the end of the previous quarter. Our calculations also showed that ORI 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.

Today there are a multitude of tools stock market investors put to use to value their holdings. Two of the most under-the-radar tools are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outclass their index-focused peers by a significant margin (see the details here).

Martin Whitman Third Avenue Management Marty Whitman

Martin Whitman of Third Avenue Management

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. 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 let’s take a peek at the key hedge fund action surrounding Old Republic International Corporation (NYSE:ORI).

Hedge fund activity in Old Republic International Corporation (NYSE:ORI)

Heading into the second quarter of 2020, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 35% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ORI over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in Old Republic International Corporation (NYSE:ORI), which was worth $76.7 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $56.6 million worth of shares. AQR Capital Management, Third Avenue Management, and Marshall Wace LLP 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 Third Avenue Management allocated the biggest weight to Old Republic International Corporation (NYSE:ORI), around 1.8% of its 13F portfolio. Interval Partners is also relatively very bullish on the stock, dishing out 0.29 percent of its 13F equity portfolio to ORI.

As industrywide interest jumped, specific money managers were breaking ground themselves. Third Avenue Management, managed by Martin Whitman, established the biggest position in Old Republic International Corporation (NYSE:ORI). Third Avenue Management had $12.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $11 million position during the quarter. The other funds with brand new ORI positions are Michael Gelband’s ExodusPoint Capital, Bruce Kovner’s Caxton Associates LP, and Greg Eisner’s Engineers Gate Manager.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Old Republic International Corporation (NYSE:ORI) but similarly valued. We will take a look at Caesars Entertainment Corp (NASDAQ:CZR), HD Supply Holdings Inc (NASDAQ:HDS), Euronet Worldwide, Inc. (NASDAQ:EEFT), and Enel Chile S.A. (NYSE:ENIC). This group of stocks’ market valuations resemble ORI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CZR 47 2040793 1
HDS 40 856283 2
EEFT 30 240212 -17
ENIC 8 17690 2
Average 31.25 788745 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.25 hedge funds with bullish positions and the average amount invested in these stocks was $789 million. That figure was $241 million in ORI’s case. Caesars Entertainment Corp (NASDAQ:CZR) is the most popular stock in this table. On the other hand Enel Chile S.A. (NYSE:ENIC) is the least popular one with only 8 bullish hedge fund positions. Old Republic International Corporation (NYSE:ORI) 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 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 8.3% in 2020 through the end of May and surpassed the market by 13.2 percentage points. Unfortunately ORI wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); ORI investors were disappointed as the stock returned 2.2% during the second quarter 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 most of these stocks already outperformed the market in 2020.

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