Energizer Holdings, Inc. (ENR): Are Hedge Funds Right About This Stock?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Energizer Holdings, Inc. (NYSE:ENR) based on that data and determine whether they were really smart about the stock.

Energizer Holdings, Inc. (NYSE:ENR) has experienced an increase in hedge fund sentiment of late. Energizer Holdings, Inc. (NYSE:ENR) was in 25 hedge funds’ portfolios at the end of June. The all time high for this statistics is 26. There were 21 hedge funds in our database with ENR positions at the end of the first quarter. Our calculations also showed that ENR isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 56 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. 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 to get excerpts of these letters in your inbox. Now let’s analyze the new hedge fund action surrounding Energizer Holdings, Inc. (NYSE:ENR).

What have hedge funds been doing with Energizer Holdings, Inc. (NYSE:ENR)?

At Q2’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the first quarter of 2020. On the other hand, there were a total of 17 hedge funds with a bullish position in ENR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Mario Gabelli’s GAMCO Investors has the number one position in Energizer Holdings, Inc. (NYSE:ENR), worth close to $81.9 million, accounting for 0.9% of its total 13F portfolio. Coming in second is Armistice Capital, led by Steven Boyd, holding a $54.5 million position; the fund has 2.4% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism encompass Israel Englander’s Millennium Management, Steve Cohen’s Point72 Asset Management and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Energizer Holdings, Inc. (NYSE:ENR), around 2.39% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, designating 1.1 percent of its 13F equity portfolio to ENR.

With a general bullishness amongst the heavyweights, some big names have jumped into Energizer Holdings, Inc. (NYSE:ENR) headfirst. Millennium Management, managed by Israel Englander, established the largest position in Energizer Holdings, Inc. (NYSE:ENR). Millennium Management had $41 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $18.8 million investment in the stock during the quarter. The other funds with brand new ENR positions are Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Mark Coe’s Intrinsic Edge Capital.

Let’s go over hedge fund activity in other stocks similar to Energizer Holdings, Inc. (NYSE:ENR). We will take a look at SVMK Inc. (NASDAQ:SVMK), Stifel Financial Corp. (NYSE:SF), Ormat Technologies, Inc. (NYSE:ORA), Kirby Corporation (NYSE:KEX), The Hain Celestial Group, Inc. (NASDAQ:HAIN), KBR, Inc. (NYSE:KBR), and BRF SA (NYSE:BRFS). This group of stocks’ market valuations resemble ENR’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $358 million. That figure was $277 million in ENR’s case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand BRF SA (NYSE:BRFS) is the least popular one with only 16 bullish hedge fund positions. Energizer Holdings, Inc. (NYSE:ENR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ENR is 61.5. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately ENR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ENR were disappointed as the stock returned -16.5% during the same time 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 10 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.