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

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze O’Reilly Automotive Inc (NASDAQ:ORLY) from the perspective of those elite funds.

O’Reilly Automotive Inc (NASDAQ:ORLY) shareholders have witnessed an increase in enthusiasm from smart money recently. 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 Marathon Petroleum Corp (NYSE:MPC), Aon PLC (NYSE:AON), and LinkedIn Corp (NYSE:LNKD) to gather more data points.

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

What does the smart money think about O’Reilly Automotive Inc (NASDAQ:ORLY)?

At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the second quarter. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the biggest position in O’Reilly Automotive Inc (NASDAQ:ORLY), worth close to $569.9 million, corresponding to 5.4% of its total 13F portfolio. The second most bullish fund manager is Akre Capital Management, managed by Charles Akre, which holds an $206.9 million position; 4.8% of its 13F portfolio is allocated to the stock. Some other members of the smart money with similar optimism include Mario Gabelli’s GAMCO Investors, Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC and Ken Griffin’s Citadel Investment Group.

As one would reasonably expect, key hedge funds were leading the bulls’ herd. Melvin Capital Management, managed by Gabriel Plotkin, established the most outsized position in O’Reilly Automotive Inc (NASDAQ:ORLY). Melvin Capital Management had $23.8 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made an $19.4 million investment in the stock during the quarter. The other funds with brand new ORLY positions are Matthew Hulsizer’s PEAK6 Capital Management, Greg Poole’s Echo Street Capital Management, and Mike Vranos’s Ellington.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as O’Reilly Automotive Inc (NASDAQ:ORLY) but similarly valued. We will take a look at Marathon Petroleum Corp (NYSE:MPC), Aon PLC (NYSE:AON), LinkedIn Corp (NYSE:LNKD), and Intuit Inc. (NASDAQ:INTU). This group of stocks’ market caps match ORLY’s market cap.

As you can see these stocks had an average of 37.5 hedge funds with bullish positions and the average amount invested in these stocks was $2060 million. That figure was $1517 million in ORLY’s case. Marathon Petroleum Corp (NYSE:MPC) is the most popular stock in this table. On the other hand Intuit Inc. (NASDAQ:INTU) is the least popular one with only 32 bullish hedge fund positions. O’Reilly Automotive Inc (NASDAQ:ORLY) 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. In this regard MPC might be a better candidate to consider a long position.