There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Jeff Ubben, George Soros and Carl Icahn think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don't cover. Because of Carl Icahn and other elite funds' exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze OraSure Technologies, Inc. (NASDAQ:OSUR).
Is OraSure Technologies, Inc. (NASDAQ:OSUR) the right pick for your portfolio? Prominent investors are becoming less confident. The number of long hedge fund bets were trimmed by 3 lately. Our calculations also showed that OSUR isn't among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_746893" align="aligncenter" width="473"] Paul Marshall of Marshall Wace[/caption]
We're going to analyze the latest hedge fund action surrounding OraSure Technologies, Inc. (NASDAQ:OSUR).
How have hedgies been trading OraSure Technologies, Inc. (NASDAQ:OSUR)?
Heading into the second quarter of 2019, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -14% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in OSUR a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in OraSure Technologies, Inc. (NASDAQ:OSUR) was held by Renaissance Technologies, which reported holding $48.6 million worth of stock at the end of March. It was followed by D E Shaw with a $19.8 million position. Other investors bullish on the company included Daruma Asset Management, Marshall Wace LLP, and Fisher Asset Management.
Judging by the fact that OraSure Technologies, Inc. (NASDAQ:OSUR) has experienced a decline in interest from hedge fund managers, logic holds that there lies a certain "tier" of fund managers that decided to sell off their positions entirely by the end of the third quarter. Intriguingly, Minhua Zhang's Weld Capital Management cut the biggest stake of the "upper crust" of funds followed by Insider Monkey, totaling close to $1.1 million in stock, and David Harding's Winton Capital Management was right behind this move, as the fund sold off about $0.2 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest dropped by 3 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as OraSure Technologies, Inc. (NASDAQ:OSUR) but similarly valued. These stocks are Oasis Midstream Partners LP (NYSE:OMP), Cass Information Systems, Inc. (NASDAQ:CASS), Rite Aid Corporation (NYSE:RAD), and Kimbell Royalty Partners, LP (NYSE:KRP). This group of stocks' market valuations are closest to OSUR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OMP,3,4325,0 CASS,11,15276,3 RAD,9,26774,-4 KRP,5,17118,-2 Average,7,15873,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $108 million in OSUR's case. Cass Information Systems, Inc. (NASDAQ:CASS) is the most popular stock in this table. On the other hand Oasis Midstream Partners LP (NYSE:OMP) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks OraSure Technologies, Inc. (NASDAQ:OSUR) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately OSUR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on OSUR were disappointed as the stock returned -25.8% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.