Is ORBCOMM Inc (ORBC) Going to Burn These Hedge Funds?

Is ORBCOMM Inc (NASDAQ:ORBC) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments (for some reason media paid a ton of attention to Ackman’s gigantic JC Penney and Valeant failures) and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is ORBCOMM Inc (NASDAQ:ORBC) a splendid stock to buy now? The smart money is reducing their bets on the stock. The number of bullish hedge fund bets were trimmed by 3 recently. At the end of this article we will also compare ORBC to other stocks including Western Asst High Incm Opprtnty Fnd Inc. (NYSE:HIO), GP Strategies Corporation (NYSE:GPX), and Ciner Resources LP (NYSE:OCIR) to get a better sense of its popularity.

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With all of this in mind, let’s analyze the key action encompassing ORBCOMM Inc (NASDAQ:ORBC).

What have hedge funds been doing with ORBCOMM Inc (NASDAQ:ORBC)?

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the second quarter. With hedge funds’ sentiment swirling, there exist a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Raging Capital Management, managed by William C. Martin, holds the largest position in ORBCOMM Inc (NASDAQ:ORBC). Raging Capital Management has an $41.7 million position in the stock, comprising 5.5% of its 13F portfolio. On Raging Capital Management’s heels is Royce & Associates, led by Chuck Royce, holding an $20 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers that are bullish consist of Wojciech Uzdelewicz’s Espalier Global Management, Charles Paquelet’s Skylands Capital and Anand Parekh’s Alyeska Investment Group.

Because ORBCOMM Inc (NASDAQ:ORBC) has experienced falling interest from the aggregate hedge fund industry, we can see that there is a sect of funds that elected to cut their positions entirely heading into Q4. Interestingly, Ken Griffin’s Citadel Investment Group dropped the biggest position of the 700 funds followed by Insider Monkey, valued at close to $0.1 million in stock, and Matthew Hulsizer’s PEAK6 Capital Management was right behind this move, as the fund dumped about $0.1 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 3 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 Western Asst High Incm Opprtnty Fnd Inc. (NYSE:HIO), GP Strategies Corporation (NYSE:GPX), Ciner Resources LP (NYSE:OCIR), and First Majestic Silver Corp (NYSE:AG). This group of stocks’ market valuations resemble ORBC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HIO 5 22891 1
GPX 12 117145 -1
OCIR 4 1607 0
AG 8 13554 -1

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $39 million. That figure was $104 million in ORBC’s case. GP Strategies Corporation (NYSE:GPX) is the most popular stock in this table. On the other hand, Ciner Resources LP (NYSE:OCIR) is the least popular one with only 4 bullish hedge fund positions. Although ORBCOMM Inc (NASDAQ:ORBC) has obviously caught attention from investors, it is still not being the most popular stock in the group. Therefore, we’d rather focus our attention on the stocks that more investors are fond of, such as GPX in this particular group.