Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI).
Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) has seen an increase in hedge fund interest lately. OLLI was in 24 hedge funds’ portfolios at the end of December. There were 17 hedge funds in our database with OLLI positions at the end of the previous quarter. Our calculations also showed that OLLI isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s review the new hedge fund action surrounding Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI).
How have hedgies been trading Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI)?
At Q4’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 41% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OLLI over the last 14 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Marshall Wace LLP was the largest shareholder of Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI), with a stake worth $49.8 million reported as of the end of September. Trailing Marshall Wace LLP was Maverick Capital, which amassed a stake valued at $33.9 million. Millennium Management, Citadel Investment Group, and Blue Mountain Capital were also very fond of the stock, giving the stock large weights in their portfolios.
As aggregate interest increased, key hedge funds have jumped into Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) headfirst. Maverick Capital, managed by Lee Ainslie, assembled the most outsized position in Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI). Maverick Capital had $33.9 million invested in the company at the end of the quarter. Steven Boyd’s Armistice Capital also made a $7.2 million investment in the stock during the quarter. The following funds were also among the new OLLI investors: Principal Global Investors’s Columbus Circle Investors, Anthony Joseph Vaccarino’s North Fourth Asset Management, and Brandon Haley’s Holocene Advisors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) but similarly valued. We will take a look at Cinemark Holdings, Inc. (NYSE:CNK), ONE Gas Inc (NYSE:OGS), Western Alliance Bancorporation (NYSE:WAL), and Bemis Company, Inc. (NYSE:BMS). This group of stocks’ market caps are closest to OLLI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CNK | 17 | 166359 | -2 |
| OGS | 17 | 80042 | 2 |
| WAL | 28 | 353911 | 5 |
| BMS | 26 | 304544 | 0 |
| Average | 22 | 226214 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $226 million. That figure was $200 million in OLLI’s case. Western Alliance Bancorporation (NYSE:WAL) is the most popular stock in this table. On the other hand Cinemark Holdings, Inc. (NYSE:CNK) is the least popular one with only 17 bullish hedge fund positions. Ollie’s Bargain Outlet Holdings Inc (NASDAQ:OLLI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on OLLI as the stock returned 38.6% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
