Is OPTN A Good Stock To Buy Now?

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 have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider OptiNose, Inc. (NASDAQ:OPTN) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.

Is OPTN a good stock to buy now? The best stock pickers were taking an optimistic view. The number of bullish hedge fund positions increased by 2 lately. OptiNose, Inc. (NASDAQ:OPTN) was in 11 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 16. Our calculations also showed that OPTN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 9 hedge funds in our database with OPTN holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Justin John Ferayorni - Tamarack Capital Management

Justin John Ferayorni of Tamarack Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the new hedge fund action surrounding OptiNose, Inc. (NASDAQ:OPTN).

Do Hedge Funds Think OPTN Is A Good Stock To Buy Now?

At the end of September, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OPTN over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in OptiNose, Inc. (NASDAQ:OPTN) was held by GMT Capital, which reported holding $11.5 million worth of stock at the end of September. It was followed by Tamarack Capital Management with a $7.2 million position. Other investors bullish on the company included Hudson Bay Capital Management, Millennium Management, and Renaissance Technologies. In terms of the portfolio weights assigned to each position Tamarack Capital Management allocated the biggest weight to OptiNose, Inc. (NASDAQ:OPTN), around 2.22% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, designating 0.84 percent of its 13F equity portfolio to OPTN.

As industrywide interest jumped, key money managers have been driving this bullishness. Millennium Management, managed by Israel Englander, initiated the most outsized position in OptiNose, Inc. (NASDAQ:OPTN). Millennium Management had $0.9 million invested in the company at the end of the quarter. Paul Tudor Jones’s Tudor Investment Corp also made a $0.3 million investment in the stock during the quarter. The following funds were also among the new OPTN investors: Benjamin A. Smith’s Laurion Capital Management and Cliff Asness’s AQR Capital Management.

Let’s now review hedge fund activity in other stocks similar to OptiNose, Inc. (NASDAQ:OPTN). These stocks are SWK Holdings Corporation (NASDAQ:SWKH), Contango Oil & Gas Company (NYSE:MCF), Nabors Industries Ltd. (NYSE:NBR), Mustang Bio, Inc. (NASDAQ:MBIO), LSI Industries, Inc. (NASDAQ:LYTS), Gannett Co., Inc. (NYSE:GCI), and LCNB Corp. (NASDAQ:LCNB). This group of stocks’ market values resemble OPTN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SWKH 3 143747 -1
MCF 3 2678 0
NBR 12 13624 -3
MBIO 13 17492 0
LYTS 9 23658 3
GCI 11 14522 -1
LCNB 2 2996 0
Average 7.6 31245 -0.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.6 hedge funds with bullish positions and the average amount invested in these stocks was $31 million. That figure was $22 million in OPTN’s case. Mustang Bio, Inc. (NASDAQ:MBIO) is the most popular stock in this table. On the other hand LCNB Corp. (NASDAQ:LCNB) is the least popular one with only 2 bullish hedge fund positions. OptiNose, Inc. (NASDAQ:OPTN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OPTN is 68.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. Hedge funds were also right about betting on OPTN as the stock returned 17.9% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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