How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Orion Group Holdings, Inc. (NYSE:ORN).
Is ORN a good stock to buy now? Money managers were getting more bullish. The number of bullish hedge fund bets increased by 3 recently. Orion Group Holdings, Inc. (NYSE:ORN) was in 10 hedge funds’ portfolios at the end of September. The all time high for this statistics is 13. Our calculations also showed that ORN 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 7 hedge funds in our database with ORN positions at the end of the second quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are viewed as underperforming, outdated financial vehicles of the past. While there are over 8000 funds trading at the moment, Our experts hone in on the moguls of this group, around 850 funds. Most estimates calculate that this group of people oversee bulk of all hedge funds’ total capital, and by tailing their top picks, Insider Monkey has found a few investment strategies that have historically exceeded Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
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. With all of this in mind we’re going to take a look at the recent hedge fund action surrounding Orion Group Holdings, Inc. (NYSE:ORN).
Do Hedge Funds Think ORN Is A Good Stock To Buy Now?
At third quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ORN over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
The largest stake in Orion Group Holdings, Inc. (NYSE:ORN) was held by Renaissance Technologies, which reported holding $2.1 million worth of stock at the end of September. It was followed by Ancora Advisors with a $1.1 million position. Other investors bullish on the company included D E Shaw, Two Sigma Advisors, and Bailard Inc. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Orion Group Holdings, Inc. (NYSE:ORN), around 0.04% of its 13F portfolio. Bailard Inc is also relatively very bullish on the stock, earmarking 0.01 percent of its 13F equity portfolio to ORN.
Now, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, initiated the most outsized position in Orion Group Holdings, Inc. (NYSE:ORN). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also initiated a $0.1 million position during the quarter. The only other fund with a new position in the stock is Gifford Combs’s Dalton Investments.
Let’s also examine hedge fund activity in other stocks similar to Orion Group Holdings, Inc. (NYSE:ORN). We will take a look at Severn Bancorp Inc (NASDAQ:SVBI), S&W Seed Company (NASDAQ:SANW), USA Truck, Inc. (NASDAQ:USAK), Pixelworks, Inc. (NASDAQ:PXLW), Manitex International, Inc. (NASDAQ:MNTX), American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT), and Mallinckrodt Public Limited Company (NYSE:MNK). This group of stocks’ market valuations are similar to ORN’s market valuation.
|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 6.7 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $5 million in ORN’s case. Mallinckrodt Public Limited Company (NYSE:MNK) is the most popular stock in this table. On the other hand American Virtual Cloud Technologies, Inc. (NASDAQ:AVCT) is the least popular one with only 2 bullish hedge fund positions. Orion Group Holdings, Inc. (NYSE:ORN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ORN is 71.1. 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. 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 ORN as the stock returned 70.5% 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.