Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Origin Bancorp, Inc. (NASDAQ:OBNK) was in 6 hedge funds’ portfolios at the end of September. OBNK investors should be aware of an increase in hedge fund sentiment recently. There were 5 hedge funds in our database with OBNK positions at the end of the previous quarter. Our calculations also showed that OBNK isn’t among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
We’re going to go over the fresh hedge fund action surrounding Origin Bancorp, Inc. (NASDAQ:OBNK).
What does the smart money think about Origin Bancorp, Inc. (NASDAQ:OBNK)?
At the end of the third quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards OBNK over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Forest Hill Capital held the most valuable stake in Origin Bancorp, Inc. (NASDAQ:OBNK), which was worth $5.6 million at the end of the third quarter. On the second spot was Azora Capital which amassed $5.3 million worth of shares. Moreover, Balyasny Asset Management, Millennium Management, and Castine Capital Management were also bullish on Origin Bancorp, Inc. (NASDAQ:OBNK), allocating a large percentage of their portfolios to this stock.
Consequently, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the biggest position in Origin Bancorp, Inc. (NASDAQ:OBNK). Marshall Wace LLP had $1.4 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Origin Bancorp, Inc. (NASDAQ:OBNK) but similarly valued. We will take a look at Echo Global Logistics, Inc. (NASDAQ:ECHO), American Railcar Industries, Inc. (NASDAQ:ARII), Comstock Resources Inc (NYSE:CRK), and Cray Inc. (NASDAQ:CRAY). This group of stocks’ market valuations are closest to OBNK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ECHO | 14 | 43416 | -4 |
| ARII | 13 | 567890 | 1 |
| CRK | 5 | 7315 | -2 |
| CRAY | 13 | 59641 | 0 |
| Average | 11.25 | 169566 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.25 hedge funds with bullish positions and the average amount invested in these stocks was $170 million. That figure was $24 million in OBNK’s case. Echo Global Logistics, Inc. (NASDAQ:ECHO) is the most popular stock in this table. On the other hand Comstock Resources Inc (NYSE:CRK) is the least popular one with only 5 bullish hedge fund positions. Origin Bancorp, Inc. (NASDAQ:OBNK) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ECHO might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.