With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter of 2021. One of these stocks was Olink Holding AB (publ) (NASDAQ:OLK).
Is OLK a good stock to buy? The best stock pickers were betting on the stock. The number of bullish hedge fund positions moved up by 20 in recent months. Olink Holding AB (publ) (NASDAQ:OLK) was in 20 hedge funds' portfolios at the end of March. Our calculations also showed that OLK 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.
Robert Atchinson of Adage Capital Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. 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. Keeping this in mind let's take a gander at the latest hedge fund action encompassing Olink Holding AB (publ) (NASDAQ:OLK).
Do Hedge Funds Think OLK Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20 from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards OLK over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Woodline Partners held the most valuable stake in Olink Holding AB (publ) (NASDAQ:OLK), which was worth $24.3 million at the end of the fourth quarter. On the second spot was Holocene Advisors which amassed $22.3 million worth of shares. Adage Capital Management, Citadel Investment Group, and Sectoral Asset Management 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 Sectoral Asset Management allocated the biggest weight to Olink Holding AB (publ) (NASDAQ:OLK), around 1.16% of its 13F portfolio. Woodline Partners is also relatively very bullish on the stock, dishing out 0.54 percent of its 13F equity portfolio to OLK.
As aggregate interest increased, specific money managers were breaking ground themselves. Woodline Partners, managed by Michael Rockefeller and KarláKroeker, established the most valuable position in Olink Holding AB (publ) (NASDAQ:OLK). Woodline Partners had $24.3 million invested in the company at the end of the quarter. Brandon Haley's Holocene Advisors also initiated a $22.3 million position during the quarter. The following funds were also among the new OLK investors: Phill Gross and Robert Atchinson's Adage Capital Management, Ken Griffin's Citadel Investment Group, and Jerome Pfund and Michael Sjostrom's Sectoral Asset Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Olink Holding AB (publ) (NASDAQ:OLK) but similarly valued. We will take a look at Seaboard Corporation (NYSE:SEB), Alarm.com Holdings Inc (NASDAQ:ALRM), Agree Realty Corporation (NYSE:ADC), KB Home (NYSE:KBH), Ryman Hospitality Properties, Inc. (NYSE:RHP), Driven Brands Holdings Inc. (NASDAQ:DRVN), and Portland General Electric Company (NYSE:POR). This group of stocks' market valuations match OLK's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SEB,14,125291,1 ALRM,20,315314,0 ADC,18,200418,2 KBH,24,359374,-4 RHP,22,356062,2 DRVN,18,137611,18 POR,21,68488,2 Average,19.6,223223,3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.6 hedge funds with bullish positions and the average amount invested in these stocks was $223 million. That figure was $174 million in OLK's case. KB Home (NYSE:KBH) is the most popular stock in this table. On the other hand Seaboard Corporation (NYSE:SEB) is the least popular one with only 14 bullish hedge fund positions. Olink Holding AB (publ) (NASDAQ:OLK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OLK is 58. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately OLK wasn't nearly as popular as these 5 stocks and hedge funds that were betting on OLK were disappointed as the stock returned -8.4% since the end of March (through 7/16) 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.