Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Amazon, Facebook and Alibaba, have not done well in Q4 of 2018 due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average over the long-term. The top 20 stocks among hedge funds beat the S&P 500 Index ETFs by nearly 10 percentage points during the first 11 months of 2019. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) from the perspective of those elite funds.
Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) has experienced an increase in enthusiasm from smart money in recent months. ORMP was in 5 hedge funds’ portfolios at the end of September. There were 3 hedge funds in our database with ORMP positions at the end of the previous quarter. Our calculations also showed that ORMP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Now let’s take a look at the latest hedge fund action surrounding Oramed Pharmaceuticals Inc. (NASDAQ:ORMP).
What does smart money think about Oramed Pharmaceuticals Inc. (NASDAQ:ORMP)?
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ORMP over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) was held by Renaissance Technologies, which reported holding $0.7 million worth of stock at the end of September. It was followed by Sabby Capital with a $0.6 million position. Other investors bullish on the company included DAFNA Capital Management, Millennium Management, and Bourgeon Capital. In terms of the portfolio weights assigned to each position Sabby Capital allocated the biggest weight to Oramed Pharmaceuticals Inc. (NASDAQ:ORMP), around 0.32% of its 13F portfolio. DAFNA Capital Management is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to ORMP.
As one would reasonably expect, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, established the most valuable position in Oramed Pharmaceuticals Inc. (NASDAQ:ORMP). Millennium Management had $0.1 million invested in the company at the end of the quarter. John Zaro’s Bourgeon Capital also made a $0 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) but similarly valued. These stocks are Davids Tea Inc (NASDAQ:DTEA), AquaBounty Technologies, Inc. (NASDAQ:AQB), Stage Stores Inc (NYSE:SSI), and DLH Holdings Corp. (NASDAQ:DLHC). This group of stocks’ market caps resemble ORMP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DTEA | 1 | 52 | 0 |
| AQB | 2 | 4823 | 0 |
| SSI | 6 | 12714 | 1 |
| DLHC | 7 | 19081 | 0 |
| Average | 4 | 9168 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $9 million. That figure was $1 million in ORMP’s case. DLH Holdings Corp. (NASDAQ:DLHC) is the most popular stock in this table. On the other hand Davids Tea Inc (NASDAQ:DTEA) is the least popular one with only 1 bullish hedge fund positions. Oramed Pharmaceuticals Inc. (NASDAQ:ORMP) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on ORMP as the stock returned 38.2% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
