Should I Avoid Oportun Financial Corporation (OPRT)?

The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Oportun Financial Corporation (NASDAQ:OPRT).

Oportun Financial Corporation (NASDAQ:OPRT) has experienced a decrease in hedge fund interest in recent months. Oportun Financial Corporation (NASDAQ:OPRT) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 13. There were 5 hedge funds in our database with OPRT positions at the end of the fourth quarter. Our calculations also showed that OPRT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Emanuel Friedman of EJF Capital

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 analyze the latest hedge fund action encompassing Oportun Financial Corporation (NASDAQ:OPRT).

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

At first quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OPRT over the last 23 quarters. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, EJF Capital, managed by Emanuel J. Friedman, holds the largest position in Oportun Financial Corporation (NASDAQ:OPRT). EJF Capital has a $9.2 million position in the stock, comprising 0.7% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $2.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that are bullish include Frank Fu’s CaaS Capital, Renaissance Technologies and . In terms of the portfolio weights assigned to each position EJF Capital allocated the biggest weight to Oportun Financial Corporation (NASDAQ:OPRT), around 0.66% of its 13F portfolio. CaaS Capital is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to OPRT.

Due to the fact that Oportun Financial Corporation (NASDAQ:OPRT) has experienced declining sentiment from hedge fund managers, it’s safe to say that there exists a select few funds that slashed their entire stakes in the first quarter. At the top of the heap, Israel Englander’s Millennium Management cut the largest investment of all the hedgies tracked by Insider Monkey, worth an estimated $0.9 million in stock. Leonard A. Potter’s fund, Wildcat Capital Management, also said goodbye to its stock, about $0.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Oportun Financial Corporation (NASDAQ:OPRT) but similarly valued. These stocks are International Money Express, Inc. (NASDAQ:IMXI), Tecnoglass Inc. (NASDAQ:TGLS), RCI Hospitality Holdings, Inc. (NASDAQ:RICK), WiMi Hologram Cloud Inc. (NASDAQ:WIMI), CRA International, Inc. (NASDAQ:CRAI), Evelo Biosciences, Inc. (NASDAQ:EVLO), and Titan International Inc (NYSE:TWI). This group of stocks’ market valuations resemble OPRT’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 11.9 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $15 million in OPRT’s case. Titan International Inc (NYSE:TWI) is the most popular stock in this table. On the other hand Evelo Biosciences, Inc. (NASDAQ:EVLO) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Oportun Financial Corporation (NASDAQ:OPRT) is even less popular than EVLO. Our overall hedge fund sentiment score for OPRT is 13.2. 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. Hedge funds dodged a bullet by taking a bearish stance towards OPRT. Our calculations showed that the top 10 most popular hedge fund stocks 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 but managed to beat the market again by 3.3 percentage points. Unfortunately OPRT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); OPRT investors were disappointed as the stock returned 0.8% since the end of the first quarter (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 since 2019.

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