Hedge Funds Are Piling Into Ormat Technologies, Inc. (ORA)

In this article you are going to find out whether hedge funds think Ormat Technologies, Inc. (NYSE:ORA) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Ormat Technologies, Inc. (NYSE:ORA) a worthy investment now? Hedge funds were betting on the stock. The number of long hedge fund positions inched up by 4 lately. Ormat Technologies, Inc. (NYSE:ORA) was in 21 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic was previously 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ORA isn’t among the 30 most popular stocks among hedge funds (click for Q2 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 latest hedge fund action surrounding Ormat Technologies, Inc. (NYSE:ORA).

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

Heading into the third quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 24% from the first quarter of 2020. By comparison, 19 hedge funds held shares or bullish call options in ORA a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ian Simm’s Impax Asset Management has the largest position in Ormat Technologies, Inc. (NYSE:ORA), worth close to $152.1 million, amounting to 0.7% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $16.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers with similar optimism consist of Israel Englander’s Millennium Management, Steve Cohen’s Point72 Asset Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Montanaro Asset Management allocated the biggest weight to Ormat Technologies, Inc. (NYSE:ORA), around 1.11% of its 13F portfolio. Autonomy Capital is also relatively very bullish on the stock, setting aside 1.09 percent of its 13F equity portfolio to ORA.

As industrywide interest jumped, some big names were leading the bulls’ herd. Point72 Asset Management, managed by Steve Cohen, established the largest position in Ormat Technologies, Inc. (NYSE:ORA). Point72 Asset Management had $14 million invested in the company at the end of the quarter. Robert Charles Gibbins’s Autonomy Capital also made a $3.6 million investment in the stock during the quarter. The other funds with brand new ORA positions are Brandon Haley’s Holocene Advisors, Philip Hempleman’s Ardsley Partners, and Joel Greenblatt’s Gotham Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Ormat Technologies, Inc. (NYSE:ORA) but similarly valued. We will take a look at Freedom Holding Corp. (NASDAQ:FRHC), National Storage Affiliates Trust (NYSE:NSA), Ambarella Inc (NASDAQ:AMBA), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), Schneider National, Inc. (NYSE:SNDR), Hancock Whitney Corporation (NASDAQ:HWC), and Digitalbridge Group Inc (NYSE:DBRG). This group of stocks’ market values resemble ORA’s market value.

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As you can see these stocks had an average of 24.3 hedge funds with bullish positions and the average amount invested in these stocks was $342 million. That figure was $243 million in ORA’s case. Ambarella Inc (NASDAQ:AMBA) is the most popular stock in this table. On the other hand Freedom Holding Corp. (NASDAQ:FRHC) is the least popular one with only 13 bullish hedge fund positions. Ormat Technologies, Inc. (NYSE:ORA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ORA is 55.7. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 24% in 2021 through October 22nd and surpassed the market again by 1.6 percentage points. Unfortunately ORA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ORA investors were disappointed as the stock returned 3.1% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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

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