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Should You Avoid ORIX Corporation (IX)?

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of ORIX Corporation (NYSE:IX) based on that data.

ORIX Corporation (NYSE:IX) has experienced a decrease in hedge fund interest of late. Our calculations also showed that IX 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).

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

In the eyes of most shareholders, hedge funds are seen as slow, outdated financial vehicles of the past. While there are over 8000 funds with their doors open at the moment, Our researchers hone in on the aristocrats of this group, about 850 funds. These hedge fund managers manage bulk of all hedge funds’ total capital, and by keeping an eye on their top picks, Insider Monkey has uncovered various investment strategies that have historically outperformed the market. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually 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 .

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a glance at the fresh hedge fund action encompassing ORIX Corporation (NYSE:IX).

What does smart money think about ORIX Corporation (NYSE:IX)?

Heading into the second quarter of 2020, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from the fourth quarter of 2019. By comparison, 6 hedge funds held shares or bullish call options in IX a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the number one position in ORIX Corporation (NYSE:IX). Renaissance Technologies has a $3.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is D E Shaw, led by D. E. Shaw, holding a $1.5 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish comprise Israel Englander’s Millennium Management, John Overdeck and David Siegel’s Two Sigma Advisors and . In terms of the portfolio weights assigned to each position Renaissance Technologies allocated the biggest weight to ORIX Corporation (NYSE:IX), around 0.0035% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, earmarking 0.0026 percent of its 13F equity portfolio to IX.

Since ORIX Corporation (NYSE:IX) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there was a specific group of funds who sold off their entire stakes heading into Q4. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the largest stake of all the hedgies monitored by Insider Monkey, comprising close to $0.5 million in stock. Ken Griffin’s fund, Citadel Investment Group, also said goodbye to its stock, about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 2 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as ORIX Corporation (NYSE:IX) but similarly valued. These stocks are Akamai Technologies, Inc. (NASDAQ:AKAM), The Cooper Companies, Inc. (NYSE:COO), Best Buy Co., Inc. (NYSE:BBY), and Essex Property Trust Inc (NYSE:ESS). All of these stocks’ market caps are closest to IX’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AKAM 40 757103 4
COO 25 931667 -3
BBY 37 633714 12
ESS 31 368188 -2
Average 33.25 672668 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.25 hedge funds with bullish positions and the average amount invested in these stocks was $673 million. That figure was $7 million in IX’s case. Akamai Technologies, Inc. (NASDAQ:AKAM) is the most popular stock in this table. On the other hand The Cooper Companies, Inc. (NYSE:COO) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks ORIX Corporation (NYSE:IX) is even less popular than COO. Hedge funds dodged a bullet by taking a bearish stance towards IX. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately IX wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); IX investors were disappointed as the stock returned 11.7% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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

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