Is ORBC 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. Insider Monkey finished processing 817 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2020. What do these smart investors think about ORBCOMM Inc (NASDAQ:ORBC)?

Is ORBC  a good stock to buy now? ORBC has seen a decrease in hedge fund interest in recent months. ORBCOMM Inc (NASDAQ:ORBC) was in 13 hedge funds’ portfolios at the end of September. The all time high for this statistic is 19. There were 19 hedge funds in our database with ORBC positions at the end of the second quarter. Our calculations also showed that ORBC 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).

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

In the 21st century investor’s toolkit there are a large number of indicators stock traders put to use to assess their stock investments. A pair of the best indicators are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best fund managers can trounce the broader indices by a healthy margin (see the details here).

John Rogers Ariel Investments

John Rogers of Ariel Investments

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 we’re going to review the recent hedge fund action encompassing ORBCOMM Inc (NASDAQ:ORBC).

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

At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -32% from the previous quarter. By comparison, 15 hedge funds held shares or bullish call options in ORBC a year ago. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

More specifically, Adage Capital Management was the largest shareholder of ORBCOMM Inc (NASDAQ:ORBC), with a stake worth $26.2 million reported as of the end of September. Trailing Adage Capital Management was Ariel Investments, which amassed a stake valued at $6.4 million. Rubric Capital Management, Renaissance Technologies, and Impax 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 Rubric Capital Management allocated the biggest weight to ORBCOMM Inc (NASDAQ:ORBC), around 0.53% of its 13F portfolio. Ariel Investments is also relatively very bullish on the stock, setting aside 0.09 percent of its 13F equity portfolio to ORBC.

Because ORBCOMM Inc (NASDAQ:ORBC) has witnessed a decline in interest from hedge fund managers, logic holds that there lies a certain “tier” of hedge funds that elected to cut their entire stakes heading into Q4. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP cut the largest position of the 750 funds tracked by Insider Monkey, totaling about $0.9 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $0.5 million worth. These transactions are interesting, as total hedge fund interest was cut by 6 funds heading into Q4.

Let’s now take a look at hedge fund activity in other stocks similar to ORBCOMM Inc (NASDAQ:ORBC). These stocks are Metacrine, Inc. (NASDAQ:MTCR), Arbutus Biopharma Corp (NASDAQ:ABUS), Liminal BioSciences Inc. (NASDAQ:LMNL), Stereotaxis Inc (NYSE:STXS), iRadimed Corporation (NASDAQ:IRMD), Capital Southwest Corporation (NASDAQ:CSWC), and Taseko Mines Limited (NYSE:TGB). This group of stocks’ market values match ORBC’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MTCR 8 25031 8
ABUS 9 9749 1
LMNL 1 34325 -1
STXS 14 107524 0
IRMD 6 33517 -3
CSWC 7 8484 -1
TGB 5 7070 2
Average 7.1 32243 0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.1 hedge funds with bullish positions and the average amount invested in these stocks was $32 million. That figure was $49 million in ORBC’s case. Stereotaxis Inc (NYSE:STXS) is the most popular stock in this table. On the other hand Liminal BioSciences Inc. (NASDAQ:LMNL) is the least popular one with only 1 bullish hedge fund positions. ORBCOMM Inc (NASDAQ:ORBC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ORBC is 65.7. 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 ORBC as the stock returned 81.8% 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.