Ollie’s Bargain Outlet Holdings Inc (OLLI): Are Hedge Funds Right About This Stock?

Is Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) ready to rally soon? Prominent investors were becoming more confident. The number of long hedge fund bets increased by 3 in recent months. Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) was in 24 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that OLLI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Charles Akre Akre Capital Management

Charles Akre of Akre Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Keeping this in mind we’re going to take a look at the fresh hedge fund action encompassing Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI).

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

At first quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. On the other hand, there were a total of 19 hedge funds with a bullish position in OLLI a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Akre Capital Management, managed by Charles Akre, holds the number one position in Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI). Akre Capital Management has a $43.5 million position in the stock, comprising 0.3% of its 13F portfolio. The second largest stake is held by Millennium Management, managed by Israel Englander, which holds a $35.5 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish contain John Overdeck and David Siegel’s Two Sigma Advisors, Ken Griffin’s Citadel Investment Group and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Aravt Global allocated the biggest weight to Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), around 4.23% of its 13F portfolio. Akre Capital Management is also relatively very bullish on the stock, earmarking 0.3 percent of its 13F equity portfolio to OLLI.

As industrywide interest jumped, some big names have jumped into Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) headfirst. Millennium Management, managed by Israel Englander, initiated the largest position in Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI). Millennium Management had $35.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $20.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Yen Liow’s Aravt Global, Brandon Haley’s Holocene Advisors, and Noam Gottesman’s GLG Partners.

Let’s go over hedge fund activity in other stocks similar to Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI). We will take a look at National Instruments Corporation (NASDAQ:NATI), Eastgroup Properties Inc (NYSE:EGP), Unum Group (NYSE:UNM), PLDT Inc. (NYSE:PHI), Eagle Materials, Inc. (NYSE:EXP), Haemonetics Corporation (NYSE:HAE), and NeoGenomics, Inc. (NASDAQ:NEO). All of these stocks’ market caps resemble OLLI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NATI 21 248825 3
EGP 13 82942 0
UNM 33 283684 8
PHI 4 86933 0
EXP 35 348037 -2
HAE 37 585529 5
NEO 15 80571 0
Average 22.6 245217 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $245 million. That figure was $194 million in OLLI’s case. Haemonetics Corporation (NYSE:HAE) is the most popular stock in this table. On the other hand PLDT Inc. (NYSE:PHI) is the least popular one with only 4 bullish hedge fund positions. Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OLLI is 59.5. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately OLLI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OLLI were disappointed as the stock returned 1.2% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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