Is Orrstown Financial Services, Inc. (ORRF) A Good Stock To Buy?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 866 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Orrstown Financial Services, Inc. (NASDAQ:ORRF).

Is ORRF a good stock to buy? Orrstown Financial Services, Inc. (NASDAQ:ORRF) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of March. Our calculations also showed that ORRF isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). At the end of this article we will also compare ORRF to other stocks including Stratus Properties Inc. (NASDAQ:STRS), Professional Holding Corp. (NASDAQ:PFHD), and Hamilton Beach Brands Holding Company (NYSE:HBB) to get a better sense of its popularity.

In the financial world there are a large number of formulas market participants employ to assess publicly traded companies. A pair of the less utilized formulas are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can beat their index-focused peers by a superb amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Phil Stone of Fourthstone LLC

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. With all of this in mind we’re going to check out the new hedge fund action regarding Orrstown Financial Services, Inc. (NASDAQ:ORRF).

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

At the end of March, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ORRF over the last 23 quarters. So, let’s see 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, Renaissance Technologies,  holds the most valuable position in Orrstown Financial Services, Inc. (NASDAQ:ORRF). Renaissance Technologies has a $5.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Fourthstone LLC, led by Phil Stone, holding a $1.8 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Israel Englander’s Millennium Management, Thomas Bailard’s Bailard Inc and . In terms of the portfolio weights assigned to each position Fourthstone LLC allocated the biggest weight to Orrstown Financial Services, Inc. (NASDAQ:ORRF), around 0.9% of its 13F portfolio. Bailard Inc is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to ORRF.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s go over hedge fund activity in other stocks similar to Orrstown Financial Services, Inc. (NASDAQ:ORRF). We will take a look at Stratus Properties Inc. (NASDAQ:STRS), Professional Holding Corp. (NASDAQ:PFHD), Hamilton Beach Brands Holding Company (NYSE:HBB), Safe Bulkers, Inc. (NYSE:SB), Great Ajax Corp (NYSE:AJX), Mogo Inc. (NASDAQ:MOGO), and EMX Royalty Corporation (NYSE:EMX). This group of stocks’ market valuations resemble ORRF’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $8 million in ORRF’s case. Great Ajax Corp (NYSE:AJX) is the most popular stock in this table. On the other hand Stratus Properties Inc. (NASDAQ:STRS) is the least popular one with only 3 bullish hedge fund positions. Orrstown Financial Services, Inc. (NASDAQ:ORRF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ORRF is 35.3. 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. 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 still beat the market by 3.3 percentage points. A small number of hedge funds were also right about betting on ORRF as the stock returned 13% since the end of the first quarter (through 6/11) and outperformed the market by an even larger margin.

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