Is Orphazyme (ORPH) 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 at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of Orphazyme A/S (NASDAQ:ORPH).

Is Orphazyme (ORPH) a good stock to buy here? The smart money was getting more bullish. The number of long hedge fund positions went up by 5 in recent months. Orphazyme A/S (NASDAQ:ORPH) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that ORPH 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.

At the moment there are many indicators market participants can use to value their holdings. A pair of the most underrated indicators are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat their index-focused peers by a significant amount (see the details here).

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

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. Now let’s take a gander at the fresh hedge fund action encompassing Orphazyme A/S (NASDAQ:ORPH).

What have hedge funds been doing with Orphazyme A/S (NASDAQ:ORPH)?

At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5 from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ORPH 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.

Among these funds, Islet Management held the most valuable stake in Orphazyme A/S (NASDAQ:ORPH), which was worth $14 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $2.1 million worth of shares. Millennium Management, Schonfeld Strategic Advisors, and Hound Partners 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 Islet Management allocated the biggest weight to Orphazyme A/S (NASDAQ:ORPH), around 0.96% of its 13F portfolio. Schonfeld Strategic Advisors is also relatively very bullish on the stock, earmarking 0.16 percent of its 13F equity portfolio to ORPH.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Islet Management, managed by Joseph Samuels, assembled the largest position in Orphazyme A/S (NASDAQ:ORPH). Islet Management had $14 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $2.1 million investment in the stock during the quarter. The other funds with brand new ORPH positions are Israel Englander’s Millennium Management, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Jonathan Auerbach’s Hound Partners.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Orphazyme A/S (NASDAQ:ORPH) but similarly valued. These stocks are Sunlands Technology Group (NYSE:STG), Landec Corporation (NASDAQ:LNDC), Itamar Medical Ltd. (NASDAQ:ITMR), Biglari Holdings Inc (NYSE:BH), Heritage Insurance Holdings Inc (NYSE:HRTG), SunCoke Energy, Inc (NYSE:SXC), and Digimarc Corp (NASDAQ:DMRC). This group of stocks’ market caps are similar to ORPH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STG 1 131 -1
LNDC 14 74381 -1
ITMR 9 38617 -1
BH 9 26358 -3
HRTG 11 29862 -1
SXC 19 61420 0
DMRC 6 26173 -1
Average 9.9 36706 -1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.9 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $21 million in ORPH’s case. SunCoke Energy, Inc (NYSE:SXC) is the most popular stock in this table. On the other hand Sunlands Technology Group (NYSE:STG) is the least popular one with only 1 bullish hedge fund positions. Orphazyme A/S (NASDAQ:ORPH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ORPH is 27.8. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 surpassed the market again by 16.1 percentage points. Unfortunately ORPH wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ORPH investors were disappointed as the stock returned -5.8% since the end of September (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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