We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of EnPro Industries, Inc. (NYSE:NPO) based on that data.
EnPro Industries, Inc. (NYSE:NPO) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 14 hedge funds’ portfolios at the end of March. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as United Fire Group, Inc. (NASDAQ:UFCS), The Gorman-Rupp Company (NYSE:GRC), and Group 1 Automotive, Inc. (NYSE:GPI) to gather more data points. Our calculations also showed that NPO isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology’s influence will go beyond online payments. So, we are checking out this futurist’s moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to go over the recent hedge fund action surrounding EnPro Industries, Inc. (NYSE:NPO).
What does smart money think about EnPro Industries, Inc. (NYSE:NPO)?
Heading into the second quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. By comparison, 17 hedge funds held shares or bullish call options in NPO a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, GAMCO Investors was the largest shareholder of EnPro Industries, Inc. (NYSE:NPO), with a stake worth $56.1 million reported as of the end of September. Trailing GAMCO Investors was Paradice Investment Management, which amassed a stake valued at $29.2 million. Renaissance Technologies, Birch Run Capital, and GLG Partners were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Paradice Investment Management allocated the biggest weight to EnPro Industries, Inc. (NYSE:NPO), around 3.24% of its 13F portfolio. Birch Run Capital is also relatively very bullish on the stock, setting aside 2.44 percent of its 13F equity portfolio to NPO.
Because EnPro Industries, Inc. (NYSE:NPO) has experienced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there is a sect of money managers that slashed their entire stakes last quarter. At the top of the heap, Dmitry Balyasny’s Balyasny Asset Management cut the largest investment of all the hedgies monitored by Insider Monkey, valued at about $1 million in stock. Thomas Bailard’s fund, Bailard Inc, also dumped its stock, about $0.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as EnPro Industries, Inc. (NYSE:NPO) but similarly valued. These stocks are United Fire Group, Inc. (NASDAQ:UFCS), The Gorman-Rupp Company (NYSE:GRC), Group 1 Automotive, Inc. (NYSE:GPI), and Bright Scholar Education Holdings Limited (NYSE:BEDU). This group of stocks’ market caps are similar to NPO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UFCS | 5 | 7690 | -1 |
| GRC | 8 | 41746 | -1 |
| GPI | 15 | 96849 | -7 |
| BEDU | 9 | 76688 | 1 |
| Average | 9.25 | 55743 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $103 million in NPO’s case. Group 1 Automotive, Inc. (NYSE:GPI) is the most popular stock in this table. On the other hand United Fire Group, Inc. (NASDAQ:UFCS) is the least popular one with only 5 bullish hedge fund positions. EnPro Industries, Inc. (NYSE:NPO) 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 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 13.3% in 2020 through June 25th but beat the market by 16.8 percentage points. Unfortunately NPO wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on NPO 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.
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Disclosure: None. This article was originally published at Insider Monkey.
