Where Do Hedge Funds Stand On Orion Energy Systems, Inc. (OESX)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Orion Energy Systems, Inc. (NYSE:OESX) based on that data.

Orion Energy Systems, Inc. (NYSE:OESX) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 10 hedge funds’ portfolios at the end of the second quarter of 2021. Our calculations also showed that OESX isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Sharps Compliance Corp. (NASDAQ:SMED), BBQ Holdings, Inc. (NASDAQ:BBQ), and Bancroft Fund Limited (NYSE:BCV) to gather more data points.

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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Peter Algert of Algert Global

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 let’s take a look at the latest hedge fund action regarding Orion Energy Systems, Inc. (NYSE:OESX).

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

At second quarter’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in OESX over the last 24 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).

The largest stake in Orion Energy Systems, Inc. (NYSE:OESX) was held by Renaissance Technologies, which reported holding $11.4 million worth of stock at the end of June. It was followed by Millennium Management with a $2.8 million position. Other investors bullish on the company included Two Sigma Advisors, PDT Partners, and AQR Capital Management. In terms of the portfolio weights assigned to each position Algert Global allocated the biggest weight to Orion Energy Systems, Inc. (NYSE:OESX), around 0.02% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to OESX.

Due to the fact that Orion Energy Systems, Inc. (NYSE:OESX) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of funds that decided to sell off their positions entirely heading into Q3. It’s worth mentioning that John W. Rogers’s Ariel Investments dropped the largest stake of the 750 funds monitored by Insider Monkey, totaling about $0.7 million in stock, and Donald Sussman’s Paloma Partners was right behind this move, as the fund dropped about $0.1 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Orion Energy Systems, Inc. (NYSE:OESX) but similarly valued. We will take a look at Sharps Compliance Corp. (NASDAQ:SMED), BBQ Holdings, Inc. (NASDAQ:BBQ), Bancroft Fund Limited (NYSE:BCV), DHI Group Inc. (NYSE:DHX), J Alexander’s Holdings Inc (NYSE:JAX), Orion Group Holdings, Inc. (NYSE:ORN), and Bel Fuse, Inc. (NASDAQ:BELFA). This group of stocks’ market caps resemble OESX’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $15 million in OESX’s case. DHI Group Inc. (NYSE:DHX) is the most popular stock in this table. On the other hand Bancroft Fund Limited (NYSE:BCV) is the least popular one with only 1 bullish hedge fund positions. Orion Energy Systems, Inc. (NYSE:OESX) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OESX is 65. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 25.7% in 2021 through September 27th and beat the market again by 6.2 percentage points. Unfortunately OESX wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on OESX were disappointed as the stock returned -30.5% since the end of June (through 9/27) 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 many of these stocks already outperformed the market since 2019.

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

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