At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Organigram Holdings Inc. (NASDAQ:OGI).
Is Organigram Holdings (OGI) a good stock to buy now? The best stock pickers were turning less bullish. The number of long hedge fund bets were cut by 1 recently. Organigram Holdings Inc. (NASDAQ:OGI) was in 4 hedge funds’ portfolios at the end of September. The all time high for this statistics is 7. Our calculations also showed that OGI 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.
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 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 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.
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 take a peek at the key hedge fund action surrounding Organigram Holdings Inc. (NASDAQ:OGI).
What have hedge funds been doing with Organigram Holdings Inc. (NASDAQ:OGI)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OGI over the last 21 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management has the most valuable position in Organigram Holdings Inc. (NASDAQ:OGI), worth close to $1.6 million, amounting to less than 0.1%% of its total 13F portfolio. The second largest stake is held by Frederick DiSanto of Ancora Advisors, with a $0.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions comprise Donald Sussman’s Paloma Partners, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Organigram Holdings Inc. (NASDAQ:OGI), around 0.01% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, dishing out 0.002 percent of its 13F equity portfolio to OGI.
Because Organigram Holdings Inc. (NASDAQ:OGI) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there exists a select few hedge funds that elected to cut their positions entirely heading into Q4. At the top of the heap, Michael Gelband’s ExodusPoint Capital dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $0 million in stock. Joel Greenblatt’s fund, Gotham Asset Management, also cut its stock, about $0 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 1 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Organigram Holdings Inc. (NASDAQ:OGI) but similarly valued. We will take a look at Vera Bradley, Inc. (NASDAQ:VRA), Misonix, Inc. (NASDAQ:MSON), BlueLinx Holdings Inc. (NYSE:BXC), Nesco Holdings, Inc. (NYSE:NSCO), scPharmaceuticals Inc. (NASDAQ:SCPH), PCSB Financial Corporation (NASDAQ:PCSB), and Rayonier Advanced Materials Inc (NYSE:RYAM). This group of stocks’ market values match OGI’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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 $36 million. That figure was $2 million in OGI’s case. Vera Bradley, Inc. (NASDAQ:VRA) is the most popular stock in this table. On the other hand Misonix, Inc. (NASDAQ:MSON) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Organigram Holdings Inc. (NASDAQ:OGI) is even less popular than MSON. Our overall hedge fund sentiment score for OGI is 21.1. 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. Hedge funds clearly dropped the ball on OGI as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on OGI as the stock returned 26.7% since Q3 (through November 27th) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.