“Market volatility has picked up again over the past few weeks. Headlines highlight risks regarding interest rates, the Fed, China, house prices, auto sales, trade wars, and more. Uncertainty abounds. But doesn’t it always? I have no view on whether the recent volatility will continue for a while, or whether the market will be back at all-time highs before we know it. I remain focused on preserving and growing our capital, and continue to believe that the best way to do so is via a value-driven, concentrated, patient approach. I shun consensus holdings, rich valuations, and market fads, in favor of solid, yet frequently off-the-beaten-path, businesses run by excellent, aligned management teams, purchased at deep discounts to intrinsic value,” are the words of Maran Capital’s Dan Roller. His stock picks have been beating the S&P 500 Index handily. We pay attention to what hedge funds are doing in a particular stock before considering a potential investment because it works for us. So let’s take a glance at the smart money sentiment towards The Ensign Group, Inc. (NASDAQ:ENSG) and see how it was affected.
The Ensign Group, Inc. (NASDAQ:ENSG) investors should be aware of an increase in support from the world’s most elite money managers recently. ENSG was in 13 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with ENSG positions at the end of the previous quarter. Our calculations also showed that ENSG isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s take a look at the fresh hedge fund action surrounding The Ensign Group, Inc. (NASDAQ:ENSG).
How are hedge funds trading The Ensign Group, Inc. (NASDAQ:ENSG)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 9 hedge funds with a bullish position in ENSG at the beginning of this year. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the biggest position in The Ensign Group, Inc. (NASDAQ:ENSG), worth close to $16.1 million, amounting to 0.1% of its total 13F portfolio. The second most bullish fund manager is David Brown of Hawk Ridge Management, with a $7.8 million position; 1.7% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish include Kamran Moghtaderi’s Eversept Partners, Ken Griffin’s Citadel Investment Group and John Overdeck and David Siegel’s Two Sigma Advisors.
Consequently, some big names have jumped into The Ensign Group, Inc. (NASDAQ:ENSG) headfirst. Millennium Management, managed by Israel Englander, established the most valuable position in The Ensign Group, Inc. (NASDAQ:ENSG). Millennium Management had $0.6 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser’s Magnetar Capital also made a $0.3 million investment in the stock during the quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Ensign Group, Inc. (NASDAQ:ENSG) but similarly valued. We will take a look at BP Midstream Partners LP (NYSE:BPMP), Cronos Group Inc. (NASDAQ:CRON), The Gabelli Dividend & Income Trust (NYSE:GDV), and Global Blood Therapeutics Inc (NASDAQ:GBT). This group of stocks’ market caps match ENSG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BPMP | 4 | 94041 | 0 |
| CRON | 12 | 19560 | 6 |
| GDV | 3 | 1041 | 1 |
| GBT | 25 | 461903 | -5 |
| Average | 11 | 144136 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $39 million in ENSG’s case. Global Blood Therapeutics Inc (NASDAQ:GBT) is the most popular stock in this table. On the other hand The Gabelli Dividend & Income Trust (NYSE:GDV) is the least popular one with only 3 bullish hedge fund positions. The Ensign Group, Inc. (NASDAQ:ENSG) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard GBT might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
