In this article we will check out the progression of hedge fund sentiment towards Orbital Energy Group, Inc. (NASDAQ:OEG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Orbital Energy Group, Inc. (NASDAQ:OEG) shareholders have witnessed an increase in enthusiasm from smart money in recent months. Orbital Energy Group, Inc. (NASDAQ:OEG) was in 5 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 8. Our calculations also showed that OEG 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 put to use to appraise publicly traded companies. A duo of the less known tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can beat the market by a significant amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Michael Gelband of ExodusPoint Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $23 biotech stock and is trying to buy the rest for around $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 let's analyze the recent hedge fund action encompassing Orbital Energy Group, Inc. (NASDAQ:OEG).
Do Hedge Funds Think OEG Is A Good Stock To Buy Now?
At the end of March, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 67% from the fourth quarter of 2020. By comparison, 2 hedge funds held shares or bullish call options in OEG a year ago. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Is OEG A Good Stock To Buy?
More specifically, Millennium Management was the largest shareholder of Orbital Energy Group, Inc. (NASDAQ:OEG), with a stake worth $0.8 million reported as of the end of March. Trailing Millennium Management was Citadel Investment Group, which amassed a stake valued at $0.6 million. Citadel Investment Group, ExodusPoint Capital, and LMR Partners 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 ExodusPoint Capital allocated the biggest weight to Orbital Energy Group, Inc. (NASDAQ:OEG), around 0.0048% of its 13F portfolio. LMR Partners is also relatively very bullish on the stock, earmarking 0.0041 percent of its 13F equity portfolio to OEG.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. Millennium Management, managed by Israel Englander, created the most valuable position in Orbital Energy Group, Inc. (NASDAQ:OEG). Millennium Management had $0.8 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new OEG position is Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Orbital Energy Group, Inc. (NASDAQ:OEG) but similarly valued. These stocks are Full House Resorts, Inc. (NASDAQ:FLL), Daktronics, Inc. (NASDAQ:DAKT), CECO Environmental Corp. (NASDAQ:CECE), Horizon Global Corp (NYSE:HZN), Ruhnn Holding Limited (NASDAQ:RUHN), Cinedigm Corp (NASDAQ:CIDM), and comScore, Inc. (NASDAQ:SCOR). This group of stocks' market caps match OEG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FLL,21,63227,11 DAKT,14,16782,-1 CECE,9,43159,1 HZN,9,59724,-1 RUHN,3,2667,0 CIDM,5,695,3 SCOR,15,51605,1 Average,10.9,33980,2 [/table]
As you can see these stocks had an average of 10.9 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $2 million in OEG's case. Full House Resorts, Inc. (NASDAQ:FLL) is the most popular stock in this table. On the other hand Ruhnn Holding Limited (NASDAQ:RUHN) is the least popular one with only 3 bullish hedge fund positions. Orbital Energy Group, Inc. (NASDAQ:OEG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for OEG is 31.3. 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 negative signal and 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 17.4% in 2021 through June 18th and surpassed the market again by 6.1 percentage points. Unfortunately OEG wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); OEG investors were disappointed as the stock returned -25.7% since the end of March (through 6/18) 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 in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
