How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Ormat Technologies, Inc. (NYSE:ORA).
Is Ormat Technologies, Inc. (NYSE:ORA) a healthy stock for your portfolio? The best stock pickers were becoming more confident. The number of long hedge fund positions went up by 1 recently. Ormat Technologies, Inc. (NYSE:ORA) was in 17 hedge funds’ portfolios at the end of March. The all time high for this statistic is 19. Our calculations also showed that ORA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 let’s review the fresh hedge fund action surrounding Ormat Technologies, Inc. (NYSE:ORA).
Do Hedge Funds Think ORA Is A Good Stock To Buy Now?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the previous quarter. By comparison, 9 hedge funds held shares or bullish call options in ORA a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in Ormat Technologies, Inc. (NYSE:ORA), which was worth $158.2 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $20.8 million worth of shares. Renaissance Technologies, D E Shaw, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Montanaro Asset Management allocated the biggest weight to Ormat Technologies, Inc. (NYSE:ORA), around 1.19% of its 13F portfolio. Impax Asset Management is also relatively very bullish on the stock, dishing out 0.81 percent of its 13F equity portfolio to ORA.
As industrywide interest jumped, specific money managers have been driving this bullishness. Renaissance Technologies, initiated the largest position in Ormat Technologies, Inc. (NYSE:ORA). Renaissance Technologies had $17.7 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $15.7 million position during the quarter. The other funds with brand new ORA positions are Greg Eisner’s Engineers Gate Manager, Paul Tudor Jones’s Tudor Investment Corp, and Michael Gelband’s ExodusPoint Capital.
Let’s now review hedge fund activity in other stocks similar to Ormat Technologies, Inc. (NYSE:ORA). These stocks are Everbridge, Inc. (NASDAQ:EVBG), Navistar International Corp (NYSE:NAV), Workiva Inc (NYSE:WK), SAGE Therapeutics Inc (NASDAQ:SAGE), 21Vianet Group Inc (NASDAQ:VNET), ChampionX Corporation (NASDAQ:CHX), and The Hain Celestial Group, Inc. (NASDAQ:HAIN). This group of stocks’ market values are similar to ORA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EVBG | 49 | 1083099 | 13 |
| NAV | 21 | 2077934 | -8 |
| WK | 22 | 438709 | 3 |
| SAGE | 27 | 401401 | -2 |
| VNET | 30 | 581185 | -3 |
| CHX | 28 | 589002 | -2 |
| HAIN | 23 | 933951 | 0 |
| Average | 28.6 | 872183 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.6 hedge funds with bullish positions and the average amount invested in these stocks was $872 million. That figure was $252 million in ORA’s case. Everbridge, Inc. (NASDAQ:EVBG) is the most popular stock in this table. On the other hand Navistar International Corp (NYSE:NAV) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Ormat Technologies, Inc. (NYSE:ORA) is even less popular than NAV. Our overall hedge fund sentiment score for ORA is 32.8. 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 ORA. 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 28.5% in 2021 through July 23rd but managed to beat the market again by 10.1 percentage points. Unfortunately ORA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); ORA investors were disappointed as the stock returned -12.2% since the end of the first quarter (through 7/23) 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.
Follow Ormat Technologies Inc. (NYSE:ORA)
Follow Ormat Technologies Inc. (NYSE:ORA)
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Disclosure: None. This article was originally published at Insider Monkey.
