Many investors, including Paul Tudor Jones or Stan Druckenmiller, have been saying before last year’s Q4 market crash that the stock market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the first half of 2019, most investors recovered all of their Q4 losses as sentiment shifted and optimism dominated the US China trade negotiations. Nevertheless, many of the stocks that delivered strong returns in the first half still sport strong fundamentals and their gains were more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Enel Americas S.A. (NYSE:ENIA) changed recently.
Is Enel Americas S.A. (NYSE:ENIA) undervalued? The smart money is in a pessimistic mood. The number of bullish hedge fund bets went down by 3 recently. Our calculations also showed that ENIA isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). ENIA was in 8 hedge funds’ portfolios at the end of the third quarter of 2019. There were 11 hedge funds in our database with ENIA positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a gander at the new hedge fund action surrounding Enel Americas S.A. (NYSE:ENIA).
What does smart money think about Enel Americas S.A. (NYSE:ENIA)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -27% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ENIA over the last 17 quarters. With hedgies’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
Among these funds, AQR Capital Management held the most valuable stake in Enel Americas S.A. (NYSE:ENIA), which was worth $85.3 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $47.9 million worth of shares. Renaissance Technologies, GLG Partners, and Two Sigma Advisors 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 Caxton Associates allocated the biggest weight to Enel Americas S.A. (NYSE:ENIA), around 0.14% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, designating 0.11 percent of its 13F equity portfolio to ENIA.
Seeing as Enel Americas S.A. (NYSE:ENIA) has witnessed declining sentiment from the aggregate hedge fund industry, logic holds that there were a few fund managers who sold off their positions entirely last quarter. It’s worth mentioning that Stuart J. Zimmer’s Zimmer Partners cut the largest position of the “upper crust” of funds watched by Insider Monkey, worth about $11.1 million in stock, and Matthew Tewksbury’s Stevens Capital Management was right behind this move, as the fund dropped about $0.6 million worth. These transactions are interesting, as total hedge fund interest dropped by 3 funds last quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Enel Americas S.A. (NYSE:ENIA) but similarly valued. We will take a look at Skyworks Solutions Inc (NASDAQ:SWKS), CenturyLink, Inc. (NYSE:CTL), DexCom, Inc. (NASDAQ:DXCM), and Old Dominion Freight Line, Inc. (NASDAQ:ODFL). This group of stocks’ market values resemble ENIA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SWKS | 24 | 690929 | -7 |
| CTL | 28 | 1097755 | 1 |
| DXCM | 33 | 558258 | 3 |
| ODFL | 22 | 140882 | -1 |
| Average | 26.75 | 621956 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $622 million. That figure was $181 million in ENIA’s case. DexCom, Inc. (NASDAQ:DXCM) is the most popular stock in this table. On the other hand Old Dominion Freight Line, Inc. (NASDAQ:ODFL) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Enel Americas S.A. (NYSE:ENIA) is even less popular than ODFL. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on ENIA, though not to the same extent, as the stock returned 6.1% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
