The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Enerplus Corp (USA) (NYSE:ERF) from the perspective of those elite funds.
Is Enerplus Corp (USA) (NYSE:ERF) a buy right now? Prominent investors are buying. The number of bullish hedge fund positions went up by 2 lately. Enerplus Corp (USA) (NYSE:ERF) was in 12 hedge funds’ portfolios at the end of the third quarter of 2015. There were 10 hedge funds in our database with Enerplus Corp (USA) (NYSE:ERF) holdings at the end of the previous quarter. At the end of this article, we will also compare Enerplus Corp (USA) (NYSE:ERF) to other stocks, including Abaxis Inc (NASDAQ:ABAX), Lumentum Holdings Inc (NASDAQ:LITE), and Tower Semiconductor Ltd. (USA) (NASDAQ:TSEM) to get a better sense of its popularity.
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Today, there are numerous signals shareholders have at their disposal to grade publicly traded companies. Two of the most useful signals are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best hedge fund managers can outclass the market by a solid margin (see the details here).
Now, we’re going to take a gander at the new action encompassing Enerplus Corp (USA) (NYSE:ERF).
What does the smart money think about Enerplus Corp (USA) (NYSE:ERF)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, an increase of 20% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Israel Englander’s Millennium Management has the number one position in Enerplus Corp (USA) (NYSE:ERF), worth close to $5 million, comprising less than 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Proxima Capital Management, managed by Youlia Miteva, which holds a $4.9 million position; 1.2% of its 13F portfolio is allocated to the stock. Other professional money managers that are bullish comprise David Costen Haley’s HBK Investments, Eric Sprott’s Sprott Asset Management, and Ken Griffin’s Citadel Investment Group.
As aggregate interest increased, key money managers were leading the bulls’ herd. Sprott Asset Management made a $1.9 million investment in the stock during the quarter. The other funds with brand new Enerplus Corp (USA) (NYSE:ERF) positions are Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Chao Ku’s Nine Chapters Capital Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Enerplus Corp (USA) (NYSE:ERF) but similarly valued. These stocks are Abaxis Inc (NASDAQ:ABAX), Lumentum Holdings Inc (NASDAQ:LITE), Tower Semiconductor Ltd. (USA) (NASDAQ:TSEM), and First Merchants Corporation (NASDAQ:FRME). This group of stocks’ market caps is similar to Enerplus Corp (USA) (NYSE:ERF)’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ABAX | 12 | 25841 | -6 |
| LITE | 10 | 43311 | 10 |
| TSEM | 18 | 148570 | -6 |
| FRME | 8 | 70880 | -6 |
As you can see, these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $22 million in Enerplus Corp (USA) (NYSE:ERF)’s case. Tower Semiconductor Ltd. (USA) (NASDAQ:TSEM) is the most popular stock in this table. On the other hand, First Merchants Corporation (NASDAQ:FRME) is the least popular one with only 8 bullish hedge fund positions. Enerplus Corp (USA) (NYSE:ERF) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Tower Semiconductor Ltd. (USA) (NASDAQ:TSEM) might be a better candidate to consider a long position.
