Here is What Hedge Funds Think About O’Reilly Automotive Inc (ORLY)

Is O’Reilly Automotive Inc (NASDAQ:ORLY) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. 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 find the latest market-moving information.

O’Reilly Automotive Inc (NASDAQ:ORLY) was in 42 hedge funds’ portfolios at the end of September. ORLY has experienced a decrease in activity from the world’s largest hedge funds lately. There were 44 hedge funds in our database with ORLY positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Applied Materials, Inc. (NASDAQ:AMAT), Prologis Inc (NYSE:PLD), and V.F. Corporation (NYSE:VFC) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Keeping this in mind, we’re going to review the fresh action encompassing O’Reilly Automotive Inc (NASDAQ:ORLY).

How are hedge funds trading O’Reilly Automotive Inc (NASDAQ:ORLY)?

At Q3’s end, a total of 42 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Lee Ainslie’s Maverick Capital has the biggest position in O’Reilly Automotive Inc (NASDAQ:ORLY), worth close to $273.7 million, corresponding to 3.2% of its total 13F portfolio. On Maverick Capital’s heels is Citadel Investment Group, managed by Ken Griffin, which holds a $240.2 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions encompass Charles Akre’s Akre Capital Management, Robert Joseph Caruso’s Select Equity Group and Eric Mindich’s Eton Park Capital.

Due to the fact that O’Reilly Automotive Inc (NASDAQ:ORLY) has witnessed declining sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds who sold off their full holdings by the end of the third quarter. Intriguingly, John Burbank’s Passport Capital said goodbye to the largest investment of the 700 funds watched by Insider Monkey, totaling close to $54.1 million in stock. Malcolm Fairbairn’s fund, Ascend Capital, also sold off its stock, about $19.1 million worth. These transactions are important to note, as total hedge fund interest was cut by 2 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks similar to O’Reilly Automotive Inc (NASDAQ:ORLY). We will take a look at Applied Materials, Inc. (NASDAQ:AMAT), Prologis Inc (NYSE:PLD), V.F. Corporation (NYSE:VFC), and PPL Corporation (NYSE:PPL). This group of stocks’ market values are closest to ORLY’s market value.

As you can see these stocks had an average of 29.5 hedge funds with bullish positions and the average amount invested in these stocks was $1 billion. That figure was $1.83 billion in ORLY’s case. Applied Materials, Inc. (NASDAQ:AMAT) is the most popular stock in this table. On the other hand Prologis Inc (NYSE:PLD) is the least popular one with only 17 bullish hedge fund positions. O’Reilly Automotive Inc (NASDAQ:ORLY) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AMAT might be a better candidate to consider a long position.