We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Ennis, Inc. (NYSE:EBF), and what that likely means for the prospects of the company and its stock.
Ennis, Inc. (NYSE:EBF) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 13 hedge funds’ portfolios at the end of the third quarter of 2016. At the end of this article we will also compare EBF to other stocks including AG Mortgage Investment Trust Inc (NYSE:MITT), Omeros Corporation (NASDAQ:OMER), and Heritage Insurance Holdings Inc (NYSE:HRTG) to get a better sense of its popularity.
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What does the smart money think about Ennis, Inc. (NYSE:EBF)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in EBF over the last 5 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Cliff Asness of AQR Capital Management holds the biggest position in Ennis, Inc. (NYSE:EBF). AQR Capital Management has a $14.4 million position in the stock. On AQR Capital Management’s heels is Renaissance Technologies, one of the biggest hedge funds in the world, which holds a $12.2 million position. Other peers that are bullish consist of John Overdeck and David Siegel’s Two Sigma Advisors, D. E. Shaw’s D E Shaw and Chuck Royce’s Royce & Associates. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually dumped their positions entirely. Intriguingly, Robert B. Gillam’s McKinley Capital Management dumped the largest investment of all the hedgies tracked by Insider Monkey, comprising close to $5.1 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dumped about $4.2 million worth of shares.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ennis, Inc. (NYSE:EBF) but similarly valued. These stocks are AG Mortgage Investment Trust Inc (NYSE:MITT), Omeros Corporation (NASDAQ:OMER), Heritage Insurance Holdings Inc (NYSE:HRTG), and Gladstone Commercial Corporation (NASDAQ:GOOD). All of these stocks’ market caps are closest to EBF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MITT | 6 | 11392 | 0 |
| OMER | 3 | 23959 | -3 |
| HRTG | 15 | 37952 | 1 |
| GOOD | 8 | 33797 | 1 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $35 million in EBF’s case. Heritage Insurance Holdings Inc (NYSE:HRTG) is the most popular stock in this table. On the other hand Omeros Corporation (NASDAQ:OMER) is the least popular one with only 3 bullish hedge fund positions. Ennis, Inc. (NYSE:EBF) 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 HRTG might be a better candidate to consider taking a long position in.
Disclosure: None
