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Should You Avoid Ollie’s Bargain Outlet Holdings Inc (OLLI)?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI).

Is Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) worth your attention right now? The best stock pickers are reducing their bets on the stock. The number of long hedge fund positions decreased by 9 recently. Our calculations also showed that OLLI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). OLLI was in 19 hedge funds’ portfolios at the end of March. There were 28 hedge funds in our database with OLLI holdings at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most stock holders, hedge funds are seen as underperforming, outdated investment vehicles of years past. While there are over 8000 funds in operation at the moment, Our experts hone in on the bigwigs of this group, around 850 funds. These hedge fund managers preside over the majority of the smart money’s total capital, and by watching their highest performing investments, Insider Monkey has come up with numerous investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

GOTHAM ASSET MANAGEMENT

Joel Greenblatt of Gotham Asset Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of 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).

Hedge fund activity in Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI)

At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -32% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards OLLI over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the biggest position in Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI). Citadel Investment Group has a $32.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Charles Akre of Akre Capital Management, with a $23.2 million position; 0.2% of its 13F portfolio is allocated to the company. Other peers that are bullish contain Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Shellback Capital allocated the biggest weight to Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), around 3.03% of its 13F portfolio. Intrepid Capital Management is also relatively very bullish on the stock, setting aside 0.9 percent of its 13F equity portfolio to OLLI.

Due to the fact that Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of hedge funds who were dropping their full holdings by the end of the first quarter. Intriguingly, Paolo Mortarotti’s Tower House Partners cut the largest position of the “upper crust” of funds tracked by Insider Monkey, worth about $35.9 million in stock, and Steven Boyd’s Armistice Capital was right behind this move, as the fund dumped about $7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 9 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks similar to Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI). We will take a look at Iridium Communications Inc. (NASDAQ:IRDM), Advanced Disposal Services, Inc. (NYSE:ADSW), KBR, Inc. (NYSE:KBR), and Noble Energy, Inc. (NASDAQ:NBL). This group of stocks’ market caps are closest to OLLI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IRDM 20 228723 0
ADSW 21 739563 -1
KBR 28 424712 -1
NBL 35 382923 7
Average 26 443980 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $444 million. That figure was $96 million in OLLI’s case. Noble Energy, Inc. (NASDAQ:NBL) is the most popular stock in this table. On the other hand Iridium Communications Inc. (NASDAQ:IRDM) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) is even less popular than IRDM. Hedge funds clearly dropped the ball on OLLI as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and still beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on OLLI as the stock returned 124.1% so far in the second quarter and outperformed the market by an even larger margin.

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

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