Enzo Biochem, Inc. (ENZ): Are Hedge Funds Right About This Stock?

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

Enzo Biochem, Inc. (NYSE:ENZ) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 12 hedge funds’ portfolios at the end of September. At the end of this article we will also compare ENZ to other stocks including vTv Therapeutics Inc (NASDAQ:VTVT), ImmunoGen, Inc. (NASDAQ:IMGN), and TerraVia Holdings, Inc. (NASDAQ:TVIA) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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Now, we’re going to view the fresh action encompassing Enzo Biochem, Inc. (NYSE:ENZ).

Hedge fund activity in Enzo Biochem, Inc. (NYSE:ENZ)

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a unchanged from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in ENZ heading into this year. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, one of the largest hedge funds in the world, has the largest position in Enzo Biochem, Inc. (NYSE:ENZ), worth close to $10 million, comprising less than 0.1% of its total 13F portfolio. The second most bullish fund manager is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $2.1 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions include Robert B. Gillam’s McKinley Capital Management, D. E. Shaw’s D E Shaw and Israel Englander’s Millennium Management. 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.

Due to the fact that Enzo Biochem, Inc. (NYSE:ENZ) has witnessed no change in sentiment from the aggregate hedge fund industry, we should take a look at a certain “tier” of hedge funds who sold off their full holdings last quarter. Intriguingly, Glenn Russell Dubin’s Highbridge Capital Management dropped the biggest position of all the hedgies studied by Insider Monkey, valued at about $0.2 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dumped about $0.1 million worth of shares.

Let’s now review hedge fund activity in other stocks similar to Enzo Biochem, Inc. (NYSE:ENZ). These stocks are vTv Therapeutics Inc (NASDAQ:VTVT), ImmunoGen, Inc. (NASDAQ:IMGN), TerraVia Holdings, Inc. (NASDAQ:TVIA), and Capital Southwest Corporation (NASDAQ:CSWC). This group of stocks’ market values are closest to ENZ’s market value.

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 $22 million. That figure was $17 million in ENZ’s case. ImmunoGen, Inc. (NASDAQ:IMGN) is the most popular stock in this table. On the other hand vTv Therapeutics Inc (NASDAQ:VTVT) is the least popular one with only 3 bullish hedge fund positions. Enzo Biochem, Inc. (NYSE:ENZ) 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 IMGN might be a better candidate to consider taking a long position in.

Disclosure: none.