Is Organovo Holdings Inc (ONVO) A Good Stock To Buy?

While the market driven by short-term sentiment influenced by the accommodative interest rate environment in the US, virus news and stimulus spending, many smart money investors are starting to get cautious towards the current bull run since March, 2020 and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 40,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Organovo Holdings Inc (NASDAQ:ONVO).

Is ONVO a good stock to buy? Organovo Holdings Inc (NASDAQ:ONVO) was in 3 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 9. ONVO investors should be aware of an increase in support from the world’s most elite money managers recently. There were 2 hedge funds in our database with ONVO positions at the end of the fourth quarter. Our calculations also showed that ONVO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Cathie Wood of ARK Investment Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $28 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a look at the recent hedge fund action surrounding Organovo Holdings Inc (NASDAQ:ONVO).

Do Hedge Funds Think ONVO Is A Good Stock To Buy Now?

At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ONVO over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Organovo Holdings Inc (NASDAQ:ONVO) was held by ARK Investment Management, which reported holding $5.8 million worth of stock at the end of December. It was followed by Renaissance Technologies with a $2.2 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.

Now, key money managers have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in Organovo Holdings Inc (NASDAQ:ONVO). Citadel Investment Group had $0.1 million invested in the company at the end of the quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Organovo Holdings Inc (NASDAQ:ONVO) but similarly valued. We will take a look at Greenlane Holdings, Inc. (NASDAQ:GNLN), urban-gro, Inc. (NASDAQ:UGRO), ClearOne Inc (NASDAQ:CLRO), Catabasis Pharmaceuticals Inc (NASDAQ:CATB), 1895 Bancorp of Wisconsin, Inc. (NASDAQ:BCOW), Biocept, Inc. (NASDAQ:BIOC), and TOMI Environmental Solutions, Inc. (NASDAQ:TOMZ). This group of stocks’ market values are closest to ONVO’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 4.1 hedge funds with bullish positions and the average amount invested in these stocks was $4 million. That figure was $8 million in ONVO’s case. Catabasis Pharmaceuticals Inc (NASDAQ:CATB) is the most popular stock in this table. On the other hand urban-gro, Inc. (NASDAQ:UGRO) is the least popular one with only 1 bullish hedge fund positions. Organovo Holdings Inc (NASDAQ:ONVO) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ONVO is 26. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately ONVO wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ONVO investors were disappointed as the stock returned -10.9% since the end of March (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

Disclosure: None. This article was originally published at Insider Monkey.