Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the third quarter we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Enzo Biochem, Inc. (NYSE:ENZ) to find out whether it was one of their high conviction long-term ideas.
Amid a relatively high valuation (the stock is trading at around 38 times earnings) Enzo Biochem has seen a decrease in support from the world’s most elite money managers in recent months. At the end of this article we will also compare ENZ to other stocks, including Information Services Group, Inc. (NASDAQ:III), Rosetta Stone Inc (NYSE:RST), and Owens Realty Mortgage Inc (NYSEMKT:ORM) to get a better sense of its popularity.
Follow Enzo Biochem Inc (NYSE:ENZ)
Follow Enzo Biochem Inc (NYSE:ENZ)
At the moment there are a multitude of methods shareholders use to assess their stock investments. Some of the most under-the-radar methods are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outpace the broader indices by a superb margin (see the details here).
With all of this in mind, we’re going to take a peek at the recent action surrounding Enzo Biochem, Inc. (NYSE:ENZ).
How have hedgies been trading Enzo Biochem, Inc. (NYSE:ENZ)?
At the Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jim Simons’ Renaissance Technologies has the number one position in Enzo Biochem, Inc. (NYSE:ENZ), worth close to $3.5 million, accounting for less than 0.1% of its total 13F portfolio. The second most bullish fund is Millennium Management, led by Israel Englander, holding a $1.7 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions contain Philip Hempleman’s Ardsley Partners, Mark Coe’s Coe Capital Management, and D. E. Shaw’s D E Shaw.
Because Enzo Biochem, Inc. (NYSE:ENZ) has faced a decline in interest from hedge fund managers, logic holds that there is a sect of funds that slashed their positions entirely by the end of the third quarter. At the top of the heap, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners cut the biggest stake of the 700 funds watched by Insider Monkey, totaling about $0.1 million in stock, and Cliff Asness’ AQR Capital Management was right behind this move, as the fund dropped about $0.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks similar to Enzo Biochem, Inc. (NYSE:ENZ). We will take a look at Information Services Group, Inc. (NASDAQ:III), Rosetta Stone Inc (NYSE:RST), Owens Realty Mortgage Inc (NYSEMKT:ORM), and Rightside Group Ltd (NASDAQ:NAME). This group of stocks’ market values are closest to ENZ’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| III | 5 | 8022 | -5 |
| RST | 12 | 81507 | 1 |
| ORM | 4 | 15055 | 0 |
| NAME | 7 | 10929 | -1 |
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 $29 million. That figure was $7 million in ENZ’s case. Rosetta Stone Inc (NYSE:RST) is the most popular stock in this table. On the other hand, Owens Realty Mortgage Inc (NYSEMKT:ORM) is the least popular one with only 4 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 RST might be a better candidate to consider a long position.