We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards Olaplex Holdings Inc. (NASDAQ:OLPX).
Is Olaplex Holdings Inc. (NASDAQ:OLPX) worth your attention right now? Hedge funds were in an optimistic mood. The number of long hedge fund bets advanced by 52 in recent months. Olaplex Holdings Inc. (NASDAQ:OLPX) was in 52 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that OLPX isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind let’s go over the recent hedge fund action regarding Olaplex Holdings Inc. (NASDAQ:OLPX).
Gabriel Plotkin of Melvin Capital Management
Do Hedge Funds Think OLPX Is A Good Stock To Buy Now?
At the end of September, a total of 52 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 52 from the second quarter of 2021. On the other hand, there were a total of 0 hedge funds with a bullish position in OLPX a year ago. So, let’s review 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, Melvin Capital Management, managed by Gabriel Plotkin, holds the biggest position in Olaplex Holdings Inc. (NASDAQ:OLPX). Melvin Capital Management has a $104.1 million position in the stock, comprising 0.5% of its 13F portfolio. On Melvin Capital Management’s heels is Citadel Investment Group, led by Ken Griffin, holding a $102.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers that hold long positions comprise Andreas Halvorsen’s Viking Global, Brandon Haley’s Holocene Advisors and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Element Capital Management allocated the biggest weight to Olaplex Holdings Inc. (NASDAQ:OLPX), around 13.6% of its 13F portfolio. Atika Capital is also relatively very bullish on the stock, setting aside 1.62 percent of its 13F equity portfolio to OLPX.
As industrywide interest jumped, some big names were leading the bulls’ herd. Melvin Capital Management, managed by Gabriel Plotkin, created the most outsized position in Olaplex Holdings Inc. (NASDAQ:OLPX). Melvin Capital Management had $104.1 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $102.7 million position during the quarter. The other funds with brand new OLPX positions are Andreas Halvorsen’s Viking Global, Brandon Haley’s Holocene Advisors, and Israel Englander’s Millennium Management.
Let’s now review hedge fund activity in other stocks similar to Olaplex Holdings Inc. (NASDAQ:OLPX). These stocks are WPP Plc (NYSE:WPP), James Hardie Industries plc (NYSE:JHX), Molina Healthcare, Inc. (NYSE:MOH), Quanta Services Inc (NYSE:PWR), IDEX Corporation (NYSE:IEX), UDR, Inc. (NYSE:UDR), and The Liberty SiriusXM Group (NASDAQ:LSXMA). This group of stocks’ market values are similar to OLPX’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WPP | 5 | 15930 | -1 |
| JHX | 5 | 13962 | 1 |
| MOH | 28 | 1539147 | -6 |
| PWR | 38 | 1526790 | -2 |
| IEX | 18 | 1047528 | -4 |
| UDR | 20 | 353763 | -4 |
| LSXMA | 44 | 1901086 | 1 |
| Average | 22.6 | 914029 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $914 million. That figure was $711 million in OLPX’s case. The Liberty SiriusXM Group (NASDAQ:LSXMA) is the most popular stock in this table. On the other hand WPP Plc (NYSE:WPP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Olaplex Holdings Inc. (NASDAQ:OLPX) is more popular among hedge funds. Our overall hedge fund sentiment score for OLPX is 90. 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. 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 returned 28.6% in 2021 through November 30th but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on OLPX as the stock returned 10% since the end of September (through 11/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
