Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
In this article, we’ll take a closer look at Orion Engineered Carbons SA (NYSE:OEC), which registered a decline in popularity among smart money investors in our database between July and September. There were 12 funds in our database long the stock heading into the fourth quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Momo Inc (ADR) (NASDAQ:MOMO), Adeptus Health Inc (NYSE:ADPT), and Arcos Dorados Holding Inc (NYSE:ARCO) to gather more data points.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Now, let’s go over the recent action surrounding Orion Engineered Carbons SA (NYSE:OEC).
How have hedgies been trading Orion Engineered Carbons SA (NYSE:OEC)?
At the end of September, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, down by one fund over the quarter. On the other hand, there were a total of 15 hedge funds with a bullish position in OEC at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Lakewood Capital Management, led by Anthony Bozza, holds the biggest position in Orion Engineered Carbons SA (NYSE:OEC). Lakewood Capital Management has a $33.2 million position in the stock, comprising 0.8% of its 13F portfolio. On Lakewood Capital Management’s heels is Brigade Capital, led by Don Morgan, which holds a $25.6 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Renaissance Technologies, one of the largest hedge funds in the world, Alexander Mitchell’s Scopus Asset Management and Brett Hendrickson’s Nokomis Capital. We should note that Brigade Capital is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.