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 Ackman’s recent Valeant losses). However, it is still 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 Orion Energy Systems, Inc. (NASDAQ:OESX).
Orion Energy Systems, Inc. (NASDAQ:OSEX) shares haven’t seen a lot of action during the third quarter. One of the reasons behind the inactivity could be a drop of 28.29% in its share prices during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 6 hedge funds’ portfolios at the end of September. We will find out more about hedge funds holding positions in the company at the end of the last 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 Aeropostale, Inc. (NYSE:ARO), Cosi Inc (NASDAQ:COSI), and CHC Group Ltd (NYSE:HELI) to gather more data points.
Follow Orion Energy Systems Inc. (NASDAQ:OESX)
Follow Orion Energy Systems Inc. (NASDAQ:OESX)
At the moment, there are tons of tools shareholders use to value stocks. A couple of the most innovative tools are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite money managers can trounce their index-focused peers by a significant margin (see the details here).
Keeping this in mind, we’re going to take a look at the key action surrounding Orion Energy Systems, Inc. (NASDAQ:OESX).
How are hedge funds trading Orion Energy Systems, Inc. (NASDAQ:OESX)?
At the end of September, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, unchanged from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies holds the most valuable position in Orion Energy Systems, Inc. (NASDAQ:OESX). Renaissance Technologies has a $0.5 million position in the stock, comprising less than 0.1% of its 13F portfolio. The second largest stake is held by Centaur Capital Partners, led by Zeke Ashton, holding a $0.4 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism consist of Chuck Royce’s Royce & Associates, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, and Ken Griffin’s Citadel Investment Group.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically, a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case here because only one of the 700+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Orion Energy Systems, Inc. (NASDAQ:OESX) but similarly valued. We will take a look at Aeropostale, Inc. (NYSE:ARO), Cosi Inc (NASDAQ:COSI), CHC Group Ltd (NYSE:HELI), and Eleven Biotherapeutics Inc (NASDAQ:EBIO). This group of stocks’ market values match Orion Energy Systems, Inc. (NASDAQ:OSEX)’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARO | 9 | 12077 | -6 |
| COSI | 4 | 5590 | 0 |
| HELI | 7 | 3034 | -6 |
| EBIO | 4 | 2653 | -1 |
As you can see, these stocks had an average of 6 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $9 million in Orion Energy Systems, Inc. (NASDAQ:OSEX)’s case. Aeropostale, Inc. (NYSE:ARO) is the most popular stock in this table. On the other hand, Cosi Inc (NASDAQ:COSI) is the least popular one with only 4 bullish hedge fund positions. Orion Energy Systems, Inc. (NASDAQ:OESX) 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, Aeropostale, Inc. (NYSE:ARO) might be a better candidate to consider a long position.