Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds' 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI) in this article.
Is OLLI a good stock to buy? Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI) shareholders have witnessed an increase in hedge fund interest lately. Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI) was in 34 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistic is 31. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that OLLI isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Charles Akre of Akre Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's take a glance at the fresh hedge fund action regarding Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI).
Do Hedge Funds Think OLLI Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 42% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in OLLI over the last 21 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Akre Capital Management held the most valuable stake in Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI), which was worth $43.7 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $32.8 million worth of shares. Shellback Capital, Renaissance Technologies, and Citadel Investment Group 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 Shellback Capital allocated the biggest weight to Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI), around 1.94% of its 13F portfolio. Kehrs Ridge Capital is also relatively very bullish on the stock, earmarking 0.89 percent of its 13F equity portfolio to OLLI.
Now, some big names were leading the bulls' herd. Two Sigma Advisors, managed by John Overdeck and David Siegel, initiated the most valuable position in Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI). Two Sigma Advisors had $32.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $23.1 million investment in the stock during the quarter. The following funds were also among the new OLLI investors: D. E. Shaw's D E Shaw, Brian Scudieri's Kehrs Ridge Capital, and Ray Dalio's Bridgewater Associates.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI) but similarly valued. We will take a look at Huntington Ingalls Industries Inc (NYSE:HII), Vertiv Holdings Co (NYSE:VRT), Healthcare Trust Of America Inc (NYSE:HTA), First American Financial Corp (NYSE:FAF), Companhia de Saneamento Basico (NYSE:SBS), Lumentum Holdings Inc (NASDAQ:LITE), and Rexford Industrial Realty Inc (NYSE:REXR). This group of stocks' market caps are similar to OLLI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HII,29,321301,-1 VRT,51,970203,11 HTA,19,100300,3 FAF,42,712335,-2 SBS,11,197637,1 LITE,40,501941,-2 REXR,12,46806,-12 Average,29.1,407218,-0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.1 hedge funds with bullish positions and the average amount invested in these stocks was $407 million. That figure was $227 million in OLLI's case. Vertiv Holdings Co (NYSE:VRT) is the most popular stock in this table. On the other hand Companhia de Saneamento Basico (NYSE:SBS) is the least popular one with only 11 bullish hedge fund positions. Ollie's Bargain Outlet Holdings Inc (NASDAQ:OLLI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for OLLI is 68.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately OLLI wasn't nearly as popular as these 20 stocks and hedge funds that were betting on OLLI were disappointed as the stock returned -6.3% since the end of September (through 12/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.