Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don't make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards OraSure Technologies, Inc. (NASDAQ:OSUR) to find out whether it was one of their high conviction long-term ideas.
Hedge fund interest in OraSure Technologies, Inc. (NASDAQ:OSUR) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare OSUR to other stocks including Berry Petroleum Corporation (NASDAQ:BRY), United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC), and Delek Logistics Partners LP (NYSE:DKL) to get a better sense of its popularity.
In today’s marketplace there are many formulas investors employ to evaluate publicly traded companies. Some of the less known formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the top investment managers can outperform the market by a significant amount (see the details here).
We're going to review the latest hedge fund action regarding OraSure Technologies, Inc. (NASDAQ:OSUR).
What does the smart money think about OraSure Technologies, Inc. (NASDAQ:OSUR)?
At Q4's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in OSUR a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of OraSure Technologies, Inc. (NASDAQ:OSUR), with a stake worth $48.5 million reported as of the end of December. Trailing Renaissance Technologies was Daruma Asset Management, which amassed a stake valued at $19 million. Marshall Wace LLP, D E Shaw, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Because OraSure Technologies, Inc. (NASDAQ:OSUR) has witnessed a decline in interest from hedge fund managers, it's safe to say that there lies a certain "tier" of hedge funds who sold off their positions entirely by the end of the third quarter. It's worth mentioning that Eli Casdin's Casdin Capital sold off the biggest investment of the "upper crust" of funds watched by Insider Monkey, totaling an estimated $8.1 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital was right behind this move, as the fund sold off about $0.4 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as OraSure Technologies, Inc. (NASDAQ:OSUR) but similarly valued. These stocks are Berry Petroleum Corporation (NASDAQ:BRY), United Insurance Holdings Corp.(NDA) (NASDAQ:UIHC), Delek Logistics Partners LP (NYSE:DKL), and G1 Therapeutics, Inc. (NASDAQ:GTHX). This group of stocks' market caps are closest to OSUR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BRY,14,66829,0 UIHC,6,4923,2 DKL,2,337,1 GTHX,11,36299,-9 Average,8.25,27097,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $109 million in OSUR's case. Berry Petroleum Corporation (NASDAQ:BRY) is the most popular stock in this table. On the other hand Delek Logistics Partners LP (NYSE:DKL) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks OraSure Technologies, Inc. (NASDAQ:OSUR) is more popular among hedge funds. 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. Unfortunately OSUR wasn't nearly as popular as these 15 stock and hedge funds that were betting on OSUR were disappointed as the stock returned -19.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.