We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Enanta Pharmaceuticals Inc (NASDAQ:ENTA).
Hedge fund interest in Enanta Pharmaceuticals Inc (NASDAQ:ENTA) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare ENTA to other stocks including GCP Applied Technologies Inc. (NYSE:GCP), Bloomin’ Brands Inc (NASDAQ:BLMN), and Kontoor Brands, Inc. (NYSE:KTB) to get a better sense of its popularity.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To most shareholders, hedge funds are seen as slow, old financial vehicles of the past. While there are over 8000 funds trading at the moment, Our experts choose to focus on the upper echelon of this group, around 750 funds. It is estimated that this group of investors handle the lion’s share of all hedge funds’ total capital, and by paying attention to their unrivaled investments, Insider Monkey has come up with several investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a gander at the key hedge fund action regarding Enanta Pharmaceuticals Inc (NASDAQ:ENTA).
Hedge fund activity in Enanta Pharmaceuticals Inc (NASDAQ:ENTA)
Heading into the third quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in ENTA 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 Enanta Pharmaceuticals Inc (NASDAQ:ENTA) was held by Farallon Capital, which reported holding $81 million worth of stock at the end of March. It was followed by Renaissance Technologies with a $46.4 million position. Other investors bullish on the company included Armistice Capital, Citadel Investment Group, and Marshall Wace LLP.
Because Enanta Pharmaceuticals Inc (NASDAQ:ENTA) has faced falling interest from the smart money, logic holds that there was a specific group of hedge funds that elected to cut their entire stakes last quarter. Intriguingly, Samuel Isaly’s OrbiMed Advisors dropped the biggest investment of the “upper crust” of funds tracked by Insider Monkey, comprising about $22.3 million in stock, and Jeffrey Talpins’s Element Capital Management was right behind this move, as the fund sold off about $0.4 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Enanta Pharmaceuticals Inc (NASDAQ:ENTA) but similarly valued. We will take a look at GCP Applied Technologies Inc. (NYSE:GCP), Bloomin’ Brands Inc (NASDAQ:BLMN), Kontoor Brands, Inc. (NYSE:KTB), and Cision Ltd. (NYSE:CISN). This group of stocks’ market caps resemble ENTA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GCP | 23 | 457403 | -3 |
| BLMN | 22 | 111584 | -2 |
| KTB | 13 | 106850 | 13 |
| CISN | 21 | 102631 | 4 |
| Average | 19.75 | 194617 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $229 million in ENTA’s case. GCP Applied Technologies Inc. (NYSE:GCP) is the most popular stock in this table. On the other hand Kontoor Brands, Inc. (NYSE:KTB) is the least popular one with only 13 bullish hedge fund positions. Enanta Pharmaceuticals Inc (NASDAQ:ENTA) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ENTA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ENTA were disappointed as the stock returned -28.8% during the third quarter 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.
Disclosure: None. This article was originally published at Insider Monkey.
