Hedge fund managers like David Einhorn, Bill Ackman, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Osisko Gold Royalties Ltd (NYSE:OR).
Osisko Gold Royalties Ltd (NYSE:OR) has seen an increase in hedge fund sentiment of late. OR was in 12 hedge funds’ portfolios at the end of June. There were 7 hedge funds in our database with OR positions at the end of the previous quarter. Our calculations also showed that OR isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most stock holders, hedge funds are viewed as slow, outdated financial vehicles of the past. While there are greater than 8000 funds in operation at the moment, We hone in on the bigwigs of this group, around 750 funds. These hedge fund managers watch over most of all hedge funds’ total asset base, and by keeping an eye on their matchless picks, Insider Monkey has identified numerous investment strategies that have historically outpaced the market. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s analyze the fresh hedge fund action regarding Osisko Gold Royalties Ltd (NYSE:OR).
Hedge fund activity in Osisko Gold Royalties Ltd (NYSE:OR)
At the end of the second quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 71% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in OR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Osisko Gold Royalties Ltd (NYSE:OR) was held by Renaissance Technologies, which reported holding $16.3 million worth of stock at the end of March. It was followed by Luminus Management with a $11.7 million position. Other investors bullish on the company included Arrowstreet Capital, Millennium Management, and Citadel Investment Group.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. Luminus Management, managed by Jonathan Barrett and Paul Segal, initiated the most valuable position in Osisko Gold Royalties Ltd (NYSE:OR). Luminus Management had $11.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $4.7 million investment in the stock during the quarter. The following funds were also among the new OR investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, and Minhua Zhang’s Weld Capital Management.
Let’s also examine hedge fund activity in other stocks similar to Osisko Gold Royalties Ltd (NYSE:OR). These stocks are Heartland Financial USA Inc (NASDAQ:HTLF), Antero Resources Corporation (NYSE:AR), Trinseo S.A. (NYSE:TSE), and Federal Signal Corporation (NYSE:FSS). All of these stocks’ market caps match OR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HTLF | 8 | 23414 | 0 |
| AR | 30 | 638778 | 3 |
| TSE | 23 | 115515 | 4 |
| FSS | 20 | 52902 | 0 |
| Average | 20.25 | 207652 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $208 million. That figure was $42 million in OR’s case. Antero Resources Corporation (NYSE:AR) is the most popular stock in this table. On the other hand Heartland Financial USA Inc (NASDAQ:HTLF) is the least popular one with only 8 bullish hedge fund positions. Osisko Gold Royalties Ltd (NYSE:OR) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately OR wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); OR investors were disappointed as the stock returned -10.6% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
