In this article we will check out the progression of hedge fund sentiment towards Enbridge Inc (NYSE:ENB) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Enbridge Inc (NYSE:ENB) an exceptional stock to buy now? Money managers are taking a bullish view. The number of long hedge fund positions went up by 4 in recent months. Our calculations also showed that ENB 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). ENB was in 25 hedge funds’ portfolios at the end of March. There were 21 hedge funds in our database with ENB positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are seen as underperforming, old financial vehicles of years past. While there are greater than 8000 funds in operation at present, Our experts choose to focus on the leaders of this group, about 850 funds. Most estimates calculate that this group of people oversee the majority of all hedge funds’ total asset base, and by following their highest performing equity investments, Insider Monkey has come up with several investment strategies that have historically outperformed the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to take a peek at the fresh hedge fund action surrounding Enbridge Inc (NYSE:ENB).
How have hedgies been trading Enbridge Inc (NYSE:ENB)?
At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from one quarter earlier. By comparison, 20 hedge funds held shares or bullish call options in ENB a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Enbridge Inc (NYSE:ENB), with a stake worth $152.8 million reported as of the end of September. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $51.3 million. D E Shaw, GLG Partners, and Mountain Road 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 Heronetta Management allocated the biggest weight to Enbridge Inc (NYSE:ENB), around 7.01% of its 13F portfolio. Mountain Road Advisors is also relatively very bullish on the stock, setting aside 5.76 percent of its 13F equity portfolio to ENB.
As aggregate interest increased, key hedge funds were leading the bulls’ herd. GLG Partners, managed by Noam Gottesman, created the most valuable position in Enbridge Inc (NYSE:ENB). GLG Partners had $17.8 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $9.2 million position during the quarter. The following funds were also among the new ENB investors: John Overdeck and David Siegel’s Two Sigma Advisors, Matthew Hulsizer’s PEAK6 Capital Management, and Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks similar to Enbridge Inc (NYSE:ENB). We will take a look at Allergan plc (NYSE:AGN), Intuitive Surgical, Inc. (NASDAQ:ISRG), The TJX Companies, Inc. (NYSE:TJX), and Anthem Inc (NYSE:ANTM). All of these stocks’ market caps resemble ENB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGN | 95 | 12598171 | 9 |
| ISRG | 50 | 964310 | -1 |
| TJX | 69 | 1966466 | 12 |
| ANTM | 70 | 3549888 | -1 |
| Average | 71 | 4769709 | 4.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 71 hedge funds with bullish positions and the average amount invested in these stocks was $4770 million. That figure was $298 million in ENB’s case. Allergan plc (NYSE:AGN) is the most popular stock in this table. On the other hand Intuitive Surgical, Inc. (NASDAQ:ISRG) is the least popular one with only 50 bullish hedge fund positions. Compared to these stocks Enbridge Inc (NYSE:ENB) is even less popular than ISRG. Hedge funds dodged a bullet by taking a bearish stance towards ENB. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but managed to beat the market by 14.2 percentage points. Unfortunately ENB wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); ENB investors were disappointed as the stock returned 13% during the second quarter (through June 10th) 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 most of these stocks already outperformed the market so far in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
