Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Organovo Holdings Inc (NASDAQ:ONVO) was in 9 hedge funds’ portfolios at the end of the third quarter of 2016. ONVO shareholders have witnessed an increase in support from the world’s most successful money managers of late. There were 7 hedge funds in our database with ONVO positions at the end of the second 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 Karyopharm Therapeutics Inc (NASDAQ:KPTI), Bank Mutual Corporation (NASDAQ:BKMU), and Corenergy Infrastructure Trust Inc (NYSE:CORR) to gather more data points.
Follow Organovo Holdings Inc. (NYSEMKT:ONVO)
Follow Organovo Holdings Inc. (NYSEMKT:ONVO)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
everything possible/Shutterstock.com
How are hedge funds trading Organovo Holdings Inc (NASDAQ:ONVO)?
At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a 29% increase from the second quarter of 2016. By comparison, 8 hedge funds held shares or bullish call options in ONVO heading into this year, so hedge fund ownership is only up marginally for the year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, D E Shaw, one of the largest hedge funds in the world, holds the largest position in Organovo Holdings Inc (NASDAQ:ONVO). D E Shaw has a $2 million position in the stock. The second largest stake is held by Jim Simons of Renaissance Technologies, with a $0.3 million position. Some other members of the smart money that are bullish contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management, and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.
With general bullishness amongst the heavyweights, some big names were breaking ground themselves. Renaissance Technologies created the biggest position in Organovo Holdings Inc (NASDAQ:ONVO). Arrowstreet Capital also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new ONVO investors: Ken Griffin’s Citadel Investment Group and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks similar to Organovo Holdings Inc (NASDAQ:ONVO). These stocks are Karyopharm Therapeutics Inc (NASDAQ:KPTI), Bank Mutual Corporation (NASDAQ:BKMU), Corenergy Infrastructure Trust Inc (NYSE:CORR), and Digimarc Corp (NASDAQ:DMRC). This group of stocks’ market valuations match ONVO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KPTI | 8 | 41728 | 2 |
| BKMU | 6 | 15669 | 0 |
| CORR | 7 | 38593 | 3 |
| DMRC | 6 | 38689 | 1 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $3 million in ONVO’s case. Karyopharm Therapeutics Inc (NASDAQ:KPTI) is the most popular stock in this table. On the other hand Bank Mutual Corporation (NASDAQ:BKMU) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Organovo Holdings Inc (NASDAQ:ONVO) 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.
Disclosure: None
