Should You Buy Ormat Technologies, Inc. (ORA)?

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Ormat Technologies, Inc. (NYSE:ORA) from the perspective of those successful funds.

Is Ormat Technologies, Inc. (NYSE:ORA) a healthy stock for your portfolio? Money managers are taking an optimistic view. The number of bullish hedge fund investments moved up by 2 lately. ORA was in 14 hedge funds’ portfolios at the end of the third quarter of 2016. There were 12 hedge funds in our database with ORA positions at the end of the previous quarter. At the end of this article we will also compare ORA to other stocks including Kennedy-Wilson Holdings Inc (NYSE:KW), Cal-Maine Foods Inc (NASDAQ:CALM), and Myriad Genetics, Inc. (NASDAQ:MYGN) to get a better sense of its popularity.

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.

Joseph Sohm / Shutterstock.com

How have hedgies been trading Ormat Technologies, Inc. (NYSE:ORA)?

At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 17% rise from one quarter earlier, as hedge fund positions trends upward again. Below, you can check out the change in hedge fund sentiment towards ORA over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Impax Asset Management, led by Ian Simm, holds the most valuable position in Ormat Technologies, Inc. (NYSE:ORA). Impax Asset Management has a $26 million position in the stock, comprising 1.2% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, founded by Jim Simons, which holds a $25.4 million position. Some other professional money managers that hold long positions encompass Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Mario Gabelli’s GAMCO Investors, and Glenn Russell Dubin’s Highbridge Capital Management. We should note that Impax Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industry-wide interest jumped, specific money managers were breaking ground themselves. Ellington, led by Mike Vranos, assembled the largest position in Ormat Technologies, Inc. (NYSE:ORA). Ellington had $0.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $0.4 million position during the quarter. The only other fund with a new position in the stock is James Dondero’s Highland Capital Management.

Let’s go over hedge fund activity in other stocks similar to Ormat Technologies, Inc. (NYSE:ORA). We will take a look at Kennedy-Wilson Holdings Inc (NYSE:KW), Cal-Maine Foods Inc (NASDAQ:CALM), Myriad Genetics, Inc. (NASDAQ:MYGN), and Washington Real Estate Investment Trust (NYSE:WRE). All of these stocks’ market caps resemble ORA’s market cap.

As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $238 million. That figure was $73 million in ORA’s case. Myriad Genetics, Inc. (NASDAQ:MYGN) is the most popular stock in this table. On the other hand Kennedy-Wilson Holdings Inc (NYSE:KW) is the least popular one with only 11 bullish hedge fund positions. Ormat Technologies, Inc. (NYSE:ORA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MYGN might be a better candidate to consider taking a long position in.

Disclosure: None