In this article we will check out the progression of hedge fund sentiment towards Enphase Energy Inc (NASDAQ:ENPH) 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 Enphase Energy Inc (NASDAQ:ENPH) ready to rally soon? Prominent investors were in a bullish mood. The number of bullish hedge fund bets moved up by 1 recently. Enphase Energy Inc (NASDAQ:ENPH) was in 49 hedge funds’ portfolios at the end of March. The all time high for this statistic was 48. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that ENPH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Stuart Zimmer of Zimmer Partners
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to review the key hedge fund action encompassing Enphase Energy Inc (NASDAQ:ENPH).
Do Hedge Funds Think ENPH Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 49 of the hedge funds tracked by Insider Monkey were long this stock, a change of 2% from one quarter earlier. By comparison, 35 hedge funds held shares or bullish call options in ENPH a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of Enphase Energy Inc (NASDAQ:ENPH), with a stake worth $137.5 million reported as of the end of March. Trailing Citadel Investment Group was Sylebra Capital Management, which amassed a stake valued at $128.2 million. Citadel Investment Group, Arrowstreet Capital, and Point State Capital 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 Quaero Capital allocated the biggest weight to Enphase Energy Inc (NASDAQ:ENPH), around 5.7% of its 13F portfolio. Stamina Capital Management is also relatively very bullish on the stock, earmarking 3.7 percent of its 13F equity portfolio to ENPH.
As one would reasonably expect, specific money managers were breaking ground themselves. Zimmer Partners, managed by Stuart J. Zimmer, created the most valuable position in Enphase Energy Inc (NASDAQ:ENPH). Zimmer Partners had $39.7 million invested in the company at the end of the quarter. Doron Breen and Mori Arkin’s Sphera Global Healthcare Fund also made a $37.3 million investment in the stock during the quarter. The other funds with brand new ENPH positions are Phill Gross and Robert Atchinson’s Adage Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and D. E. Shaw’s D E Shaw.
Let’s go over hedge fund activity in other stocks similar to Enphase Energy Inc (NASDAQ:ENPH). These stocks are Martin Marietta Materials, Inc. (NYSE:MLM), West Pharmaceutical Services Inc. (NYSE:WST), Lyft, Inc. (NASDAQ:LYFT), Ameren Corporation (NYSE:AEE), Energy Transfer L.P. (NYSE:ET), Qorvo Inc (NASDAQ:QRVO), and ORIX Corporation (NYSE:IX). This group of stocks’ market caps resemble ENPH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MLM | 41 | 1951007 | 0 |
| WST | 26 | 419487 | -8 |
| LYFT | 60 | 1954603 | 8 |
| AEE | 19 | 266021 | 0 |
| ET | 25 | 647725 | 0 |
| QRVO | 41 | 2329699 | -10 |
| IX | 5 | 4886 | 2 |
| Average | 31 | 1081918 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31 hedge funds with bullish positions and the average amount invested in these stocks was $1082 million. That figure was $804 million in ENPH’s case. Lyft, Inc. (NASDAQ:LYFT) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 5 bullish hedge fund positions. Enphase Energy Inc (NASDAQ:ENPH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ENPH is 76. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately ENPH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ENPH were disappointed as the stock returned 2.3% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Enphase Energy Inc. (NASDAQ:ENPH)
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Disclosure: None. This article was originally published at Insider Monkey.
