The market has been volatile due to elections and the potential of another Federal Reserve rate increase. Small cap stocks have been on a tear, as the Russell 2000 ETF (IWM) has outperformed the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of June. SEC filings and hedge fund investor letters indicate that the smart money seems to be getting back in stocks, and the funds’ movements is one of the reasons why small-cap stocks are red hot. In this article, we will analyze what the smart money thinks of Orbital ATK Inc (NYSE:OA) and find out how it is affected by hedge funds’ moves.
So, is Orbital ATK Inc (NYSE:OA) a buy here? Hedge funds seem to be getting more bullish, judging by the fact that the number of bullish hedge fund bets inched up by one to 33 during the third quarter. At the end of this article we will also compare OA to other stocks including Weatherford International Ltd (NYSE:WFT), First Solar, Inc. (NASDAQ:FSLR), and Keysight Technologies Inc (NYSE:KEYS) to get a better sense of its popularity.
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Keeping this in mind, we’re going to review the key action encompassing Orbital ATK Inc (NYSE:OA).
How have hedgies been trading Orbital ATK Inc (NYSE:OA)?
At the end of September, 33 funds tracked by Insider Monkey were long Orbital ATK, up by 3% over the quarter. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Anand Parekh’s Alyeska Investment Group has the number one position in Orbital ATK Inc (NYSE:OA), worth close to $99.6 million, accounting for 1% of its total 13F portfolio. On Alyeska Investment Group’s heels is Israel Englander’s Millennium Management, which holds a $96.6 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions include Cliff Asness’ AQR Capital Management and Richard Barrera’s Roystone Capital Partners.
Now, key money managers were leading the bulls’ herd. Suvretta Capital Management, managed by Aaron Cowen, created the most outsized position in Orbital ATK Inc (NYSE:OA). Suvretta Capital Management had $30 million invested in the company at the end of the quarter. Philip Hilal’s Clearfield Capital also initiated a $18.1 million position during the quarter. The other funds with brand new OA positions are Paul Marshall and Ian Wace’s Marshall Wace LLP, Robert Polak’s Anchor Bolt Capital, and Phill Gross and Robert Atchinson’s Adage Capital Management.
Let’s now take a look at hedge fund activity in other stocks similar to Orbital ATK Inc (NYSE:OA). These stocks are Weatherford International Ltd (NYSE:WFT), First Solar, Inc. (NASDAQ:FSLR), Keysight Technologies Inc (NYSE:KEYS), and Sun Communities Inc (NYSE:SUI). This group of stocks’ market valuations are similar to OA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WFT | 31 | 587638 | 0 |
| FSLR | 23 | 245591 | -7 |
| KEYS | 14 | 144383 | -1 |
| SUI | 17 | 236373 | -5 |
As you can see these stocks had an average of 21 investors with bullish positions and the average amount invested in these stocks was $303 million, versus $508 million in OA’s case. Weatherford International Ltd (NYSE:WFT) is the most popular stock in this table. On the other hand, Keysight Technologies Inc (NYSE:KEYS) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Orbital ATK Inc (NYSE:OA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
