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Hedge Funds Are Betting On Old Republic International Corporation (ORI)

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Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Old Republic International Corporation (NYSE:ORI).

Is Old Republic International Corporation (NYSE:ORI) ready to rally soon? The best stock pickers were taking a bullish view. The number of long hedge fund bets increased by 2 lately. Old Republic International Corporation (NYSE:ORI) was in 26 hedge funds' portfolios at the end of June. The all time high for this statistic is 31. Our calculations also showed that ORI isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 24 hedge funds in our database with ORI positions at the end of the first quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Jeffrey Altman Owl Creek
Jeffrey Altman Owl Creek

Jeffrey Altman of Owl Creek Asset Management

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. Now we're going to view the new hedge fund action encompassing Old Republic International Corporation (NYSE:ORI).

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

At Q2's end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from one quarter earlier. By comparison, 26 hedge funds held shares or bullish call options in ORI a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey's hedge fund database, Owl Creek Asset Management, managed by Jeffrey Altman, holds the biggest position in Old Republic International Corporation (NYSE:ORI). Owl Creek Asset Management has a $146.3 million position in the stock, comprising 6.7% of its 13F portfolio. The second most bullish fund manager is Royce & Associates, led by Chuck Royce, holding a $48.5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism contain Cliff Asness's AQR Capital Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital and Martin Whitman's Third Avenue Management. In terms of the portfolio weights assigned to each position Owl Creek Asset Management allocated the biggest weight to Old Republic International Corporation (NYSE:ORI), around 6.72% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, earmarking 3.66 percent of its 13F equity portfolio to ORI.

As one would reasonably expect, key hedge funds were breaking ground themselves. GLG Partners, managed by Noam Gottesman, created the biggest position in Old Republic International Corporation (NYSE:ORI). GLG Partners had $3.9 million invested in the company at the end of the quarter. Israel Englander's Millennium Management also made a $2.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital), Greg Eisner's Engineers Gate Manager, and Matthew Hulsizer's PEAK6 Capital Management.

Let's now take a look at hedge fund activity in other stocks similar to Old Republic International Corporation (NYSE:ORI). We will take a look at Shift4 Payments, Inc. (NYSE:FOUR), Kingsoft Cloud Holdings Limited (NASDAQ:KC), Chemed Corporation (NYSE:CHE), Ternium S.A. (NYSE:TX), Hill-Rom Holdings, Inc. (NYSE:HRC), Knight-Swift Transportation Holdings Inc. (NYSE:KNX), and SiteOne Landscape Supply, Inc. (NYSE:SITE). This group of stocks' market caps resemble ORI's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FOUR,31,615370,-2 KC,12,67297,-4 CHE,30,313539,6 TX,15,213272,1 HRC,22,387344,-8 KNX,26,270712,1 SITE,25,233624,9 Average,23,300165,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $300 million. That figure was $367 million in ORI's case. Shift4 Payments, Inc. (NYSE:FOUR) is the most popular stock in this table. On the other hand Kingsoft Cloud Holdings Limited (NASDAQ:KC) is the least popular one with only 12 bullish hedge fund positions. Old Republic International Corporation (NYSE:ORI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ORI is 69. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on ORI as the stock returned 6.1% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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