Where Do Hedge Funds Stand On ORBCOMM Inc (ORBC)?

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on ORBCOMM Inc (NASDAQ:ORBC).

ORBCOMM Inc (NASDAQ:ORBC) has experienced an increase in hedge fund interest of late. ORBCOMM Inc (NASDAQ:ORBC) was in 19 hedge funds’ portfolios at the end of March. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 16 hedge funds in our database with ORBC positions at the end of the fourth quarter. Our calculations also showed that ORBC 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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

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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 let’s take a look at the new hedge fund action surrounding ORBCOMM Inc (NASDAQ:ORBC).

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

At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in ORBC over the last 23 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

Is ORBC A Good Stock To Buy?

Among these funds, Adage Capital Management held the most valuable stake in ORBCOMM Inc (NASDAQ:ORBC), which was worth $54.7 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $11 million worth of shares. Impax Asset Management, Ariel Investments, and Millennium Management 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 Adage Capital Management allocated the biggest weight to ORBCOMM Inc (NASDAQ:ORBC), around 0.11% of its 13F portfolio. HighVista Strategies is also relatively very bullish on the stock, designating 0.1 percent of its 13F equity portfolio to ORBC.

As one would reasonably expect, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the largest position in ORBCOMM Inc (NASDAQ:ORBC). Arrowstreet Capital had $0.8 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new ORBC investors: Paul Tudor Jones’s Tudor Investment Corp, Peter Algert’s Algert Global, and Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as ORBCOMM Inc (NASDAQ:ORBC) but similarly valued. These stocks are Triterras, Inc. (NASDAQ:TRIT), Silence Therapeutics plc (NASDAQ:SLN), Newtek Business Services Corp (NASDAQ:NEWT), OneWater Marine Inc. (NASDAQ:ONEW), Insteel Industries Inc (NASDAQ:IIIN), KNOT Offshore Partners LP (NYSE:KNOP), and Poseida Therapeutics, Inc. (NASDAQ:PSTX). All of these stocks’ market caps are closest to ORBC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TRIT 12 26322 0
SLN 3 31153 3
NEWT 5 5227 -1
ONEW 14 79135 2
IIIN 12 26376 1
KNOP 4 28610 0
PSTX 11 95566 2
Average 8.7 41770 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.7 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $86 million in ORBC’s case. OneWater Marine Inc. (NASDAQ:ONEW) is the most popular stock in this table. On the other hand Silence Therapeutics plc (NASDAQ:SLN) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks ORBCOMM Inc (NASDAQ:ORBC) is more popular among hedge funds. Our overall hedge fund sentiment score for ORBC is 88. 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. 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 returned 23.8% in 2021 through July 16th but still managed to beat the market by 7.7 percentage points. Hedge funds were also right about betting on ORBC as the stock returned 46.4% since the end of March (through 7/16) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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