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Hedge Funds Warming Up To OraSure Technologies, Inc. (OSUR)

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. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of OraSure Technologies, Inc. (NASDAQ:OSUR).

Is OraSure Technologies, Inc. (NASDAQ:OSUR) ready to rally soon? Investors who are in the know are turning bullish. The number of bullish hedge fund bets inched up by 4 recently. Our calculations also showed that OSUR 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Donald Sussman Paloma Partners

Donald Sussman of Paloma Partners

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 review the key hedge fund action encompassing OraSure Technologies, Inc. (NASDAQ:OSUR).

What does smart money think about OraSure Technologies, Inc. (NASDAQ:OSUR)?

Heading into the second quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OSUR over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is OSUR A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in OraSure Technologies, Inc. (NASDAQ:OSUR), which was worth $40.9 million at the end of the third quarter. On the second spot was D E Shaw which amassed $31.9 million worth of shares. Two Sigma Advisors, Archon Capital Management, and Fisher Asset Management 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 Archon Capital Management allocated the biggest weight to OraSure Technologies, Inc. (NASDAQ:OSUR), around 1.2% of its 13F portfolio. Factorial Partners is also relatively very bullish on the stock, setting aside 0.86 percent of its 13F equity portfolio to OSUR.

Consequently, key money managers have been driving this bullishness. Archon Capital Management, managed by Constantinos J. Christofilis, assembled the largest position in OraSure Technologies, Inc. (NASDAQ:OSUR). Archon Capital Management had $3.3 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $3.1 million position during the quarter. The following funds were also among the new OSUR investors: Efrem Kamen’s Pura Vida Investments, Michael Gelband’s ExodusPoint Capital, and Israel Englander’s Millennium Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as OraSure Technologies, Inc. (NASDAQ:OSUR) but similarly valued. These stocks are GMS Inc. (NYSE:GMS), Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW), MAG Silver Corporation (NYSE:MAG), and JinkoSolar Holding Co., Ltd. (NYSE:JKS). This group of stocks’ market valuations are closest to OSUR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GMS 16 73933 -1
AAWW 17 57222 2
MAG 8 80264 -2
JKS 7 41159 -5
Average 12 63145 -1.5

View table here if you experience formatting issues.

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 $63 million. That figure was $96 million in OSUR’s case. Atlas Air Worldwide Holdings, Inc. (NASDAQ:AAWW) is the most popular stock in this table. On the other hand JinkoSolar Holding Co., Ltd. (NYSE:JKS) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks OraSure Technologies, Inc. (NASDAQ:OSUR) is more popular among hedge funds. 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 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. Unfortunately OSUR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on OSUR were disappointed as the stock returned -7.8% during the second quarter (through June 22nd) 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.