Concerns over rising interest rates and expected further rate increases have hit several stocks hard during the fourth quarter. Trends reversed 180 degrees during the first quarter amid Powell’s pivot and optimistic expectations towards a trade deal with China. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were increasing their overall exposure in the first quarter and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards ORBCOMM Inc (NASDAQ:ORBC).
ORBCOMM Inc (NASDAQ:ORBC) has seen an increase in support from the world’s most elite money managers lately. ORBC was in 16 hedge funds’ portfolios at the end of March. There were 12 hedge funds in our database with ORBC holdings at the end of the previous quarter. Our calculations also showed that orbc isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to review the recent hedge fund action surrounding ORBCOMM Inc (NASDAQ:ORBC).
Hedge fund activity in ORBCOMM Inc (NASDAQ:ORBC)
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 33% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ORBC over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Adage Capital Management was the largest shareholder of ORBCOMM Inc (NASDAQ:ORBC), with a stake worth $53.3 million reported as of the end of March. Trailing Adage Capital Management was Ariel Investments, which amassed a stake valued at $16.4 million. Raging Capital Management, Impax Asset Management, and Royce & Associates were also very fond of the stock, giving the stock large weights in their portfolios.
Now, key hedge funds were leading the bulls’ herd. Raging Capital Management, managed by William C. Martin, assembled the largest position in ORBCOMM Inc (NASDAQ:ORBC). Raging Capital Management had $6.8 million invested in the company at the end of the quarter. James Thomas Berylson’s Berylson Capital Partners also made a $2.1 million investment in the stock during the quarter. The other funds with brand new ORBC positions are Brian C. Freckmann’s Lyon Street Capital, Minhua Zhang’s Weld Capital Management, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as ORBCOMM Inc (NASDAQ:ORBC) but similarly valued. These stocks are Mercantile Bank Corp. (NASDAQ:MBWM), Overstock.com, Inc. (NASDAQ:OSTK), Caesarstone Ltd. (NASDAQ:CSTE), and Tredegar Corporation (NYSE:TG). This group of stocks’ market valuations are closest to ORBC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MBWM | 7 | 27981 | 1 |
| OSTK | 13 | 20298 | 3 |
| CSTE | 6 | 20632 | 0 |
| TG | 12 | 67801 | 1 |
| Average | 9.5 | 34178 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $96 million in ORBC’s case. Overstock.com, Inc. (NASDAQ:OSTK) is the most popular stock in this table. On the other hand Caesarstone Ltd. (NASDAQ:CSTE) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks ORBCOMM Inc (NASDAQ:ORBC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on ORBC as the stock returned 8.1% during the same period 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.
Disclosure: None. This article was originally published at Insider Monkey.
