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The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Orrstown Financial Services, Inc. (NASDAQ:ORRF).
Orrstown Financial Services, Inc. (NASDAQ:ORRF) was in 3 hedge funds' portfolios at the end of the third quarter of 2020. The all time high for this statistics is 5. ORRF shareholders have witnessed a decrease in enthusiasm from smart money lately. There were 4 hedge funds in our database with ORRF holdings at the end of June. Our calculations also showed that ORRF 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.
At the moment there are many tools market participants employ to appraise their holdings. A duo of the most underrated tools are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform their index-focused peers by a significant amount (see the details here).
Israel Englander of Millennium Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world 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. With all of this in mind let's take a look at the latest hedge fund action encompassing Orrstown Financial Services, Inc. (NASDAQ:ORRF).
Hedge fund activity in Orrstown Financial Services, Inc. (NASDAQ:ORRF)
At the end of September, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. By comparison, 3 hedge funds held shares or bullish call options in ORRF a year ago. With the smart money's capital changing hands, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies has the biggest position in Orrstown Financial Services, Inc. (NASDAQ:ORRF), worth close to $3.4 million, corresponding to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Bailard Inc, led by Thomas Bailard, holding a $0.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. In terms of the portfolio weights assigned to each position Bailard Inc allocated the biggest weight to Orrstown Financial Services, Inc. (NASDAQ:ORRF), around 0.01% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.0034 percent of its 13F equity portfolio to ORRF.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: EJF Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified ORRF as a viable investment and initiated a position in the stock.
Let's check out hedge fund activity in other stocks similar to Orrstown Financial Services, Inc. (NASDAQ:ORRF). These stocks are Harrow Health, Inc. (NASDAQ:HROW), Richmond Mutual Bancorporation, Inc. (NASDAQ:RMBI), Postal Realty Trust, Inc. (NYSE:PSTL), GTY Technology Holdings, Inc. (NASDAQ:GTYH), AudioEye, Inc. (NASDAQ:AEYE), Parke Bancorp, Inc. (NASDAQ:PKBK), and Golar LNG Partners LP (NASDAQ:GMLP). This group of stocks' market valuations are similar to ORRF's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HROW,15,33472,5 RMBI,5,3727,0 PSTL,7,27122,1 GTYH,6,8929,2 AEYE,6,15874,4 PKBK,3,10141,-1 GMLP,7,12797,0 Average,7,16009,1.6 [/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 $4 million in ORRF's case. Harrow Health, Inc. (NASDAQ:HROW) is the most popular stock in this table. On the other hand Parke Bancorp, Inc. (NASDAQ:PKBK) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Orrstown Financial Services, Inc. (NASDAQ:ORRF) is even less popular than PKBK. Our overall hedge fund sentiment score for ORRF is 22. 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. Hedge funds clearly dropped the ball on ORRF as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. 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 28.1% in 2020 through November 23rd and still beat the market by 15.4 percentage points. A small number of hedge funds were also right about betting on ORRF as the stock returned 27.3% since Q3 (through November 23rd) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.