We can judge whether Organigram Holdings Inc. (NASDAQ:OGI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
Is Organigram Holdings Inc. (NASDAQ:OGI) a bargain? Prominent investors are betting on the stock. The number of long hedge fund bets advanced by 1 lately. Our calculations also showed that OGI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). OGI was in 6 hedge funds’ portfolios at the end of September. There were 5 hedge funds in our database with OGI holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Paul Marshall of Marshall Wace
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 analyze the latest hedge fund action encompassing Organigram Holdings Inc. (NASDAQ:OGI).
What have hedge funds been doing with Organigram Holdings Inc. (NASDAQ:OGI)?
Heading into the fourth quarter of 2019, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from one quarter earlier. By comparison, 0 hedge funds held shares or bullish call options in OGI a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Paul Marshall and Ian Wace’s Marshall Wace has the biggest position in Organigram Holdings Inc. (NASDAQ:OGI), worth close to $1.5 million, comprising less than 0.1%% of its total 13F portfolio. On Marshall Wace’s heels is Ancora Advisors, managed by Frederick DiSanto, which holds a $1.1 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism encompass George Zweig, Shane Haas and Ravi Chander’s Signition LP, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Signition LP allocated the biggest weight to Organigram Holdings Inc. (NASDAQ:OGI), around 0.4% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to OGI.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Marshall Wace, managed by Paul Marshall and Ian Wace, assembled the most valuable position in Organigram Holdings Inc. (NASDAQ:OGI). Marshall Wace had $1.5 million invested in the company at the end of the quarter. George Zweig, Shane Haas and Ravi Chander’s Signition LP also initiated a $0.1 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group.
Let’s now take a look at hedge fund activity in other stocks similar to Organigram Holdings Inc. (NASDAQ:OGI). These stocks are Contura Energy, Inc. (NYSE:CTRA), Carbonite Inc (NASDAQ:CARB), Digital Turbine Inc (NASDAQ:APPS), and Intersect ENT Inc (NASDAQ:XENT). All of these stocks’ market caps match OGI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CTRA | 21 | 201571 | -1 |
| CARB | 24 | 78036 | 5 |
| APPS | 19 | 32614 | 8 |
| XENT | 20 | 209156 | 5 |
| Average | 21 | 130344 | 4.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $130 million. That figure was $3 million in OGI’s case. Carbonite Inc (NASDAQ:CARB) is the most popular stock in this table. On the other hand Digital Turbine Inc (NASDAQ:APPS) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Organigram Holdings Inc. (NASDAQ:OGI) is even less popular than APPS. Hedge funds dodged a bullet by taking a bearish stance towards OGI. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately OGI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); OGI investors were disappointed as the stock returned -21.8% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
