Is Enanta Pharmaceuticals Inc (NASDAQ:ENTA) a good bet right now? We like to analyze hedge fund sentiment before doing days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy league graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is Enanta Pharmaceuticals Inc (NASDAQ:ENTA) the right investment to pursue these days? Investors who are in the know are buying. The number of long hedge fund positions improved by 3 in recent months. Our calculations also showed that enta isn’t among the 30 most popular stocks among hedge funds. ENTA was in 21 hedge funds’ portfolios at the end of the third quarter of 2018. There were 18 hedge funds in our database with ENTA positions at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to analyze the new hedge fund action encompassing Enanta Pharmaceuticals Inc (NASDAQ:ENTA).
What does the smart money think about Enanta Pharmaceuticals Inc (NASDAQ:ENTA)?
Heading into the fourth quarter of 2018, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ENTA over the last 13 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Among these funds, Farallon Capital held the most valuable stake in Enanta Pharmaceuticals Inc (NASDAQ:ENTA), which was worth $74.1 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $72.5 million worth of shares. Moreover, Armistice Capital, Great Point Partners, and AQR Capital Management were also bullish on Enanta Pharmaceuticals Inc (NASDAQ:ENTA), allocating a large percentage of their portfolios to this stock.
Now, specific money managers have jumped into Enanta Pharmaceuticals Inc (NASDAQ:ENTA) headfirst. Great Point Partners, managed by Jeffrey Jay and David Kroin, initiated the largest position in Enanta Pharmaceuticals Inc (NASDAQ:ENTA). Great Point Partners had $18 million invested in the company at the end of the quarter. Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management also made a $7.9 million investment in the stock during the quarter. The other funds with brand new ENTA positions are Paul Marshall and Ian Wace’s Marshall Wace LLP and Steve Cohen’s Point72 Asset Management.
Let’s go over hedge fund activity in other stocks similar to Enanta Pharmaceuticals Inc (NASDAQ:ENTA). These stocks are Gentherm Inc (NASDAQ:THRM), HFF, Inc. (NYSE:HF), Park National Corporation (NYSE:PRK), and Redfin Corporation (NASDAQ:RDFN). All of these stocks’ market caps are similar to ENTA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| THRM | 13 | 104110 | -1 |
| HF | 10 | 14058 | -1 |
| PRK | 12 | 20544 | 5 |
| RDFN | 12 | 145803 | 4 |
| Average | 11.75 | 71129 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $246 million in ENTA’s case. Gentherm Inc (NASDAQ:THRM) is the most popular stock in this table. On the other hand HFF, Inc. (NYSE:HF) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Enanta Pharmaceuticals Inc (NASDAQ:ENTA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
