Is EnLink Midstream LLC (NYSE:ENLC) 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 EnLink Midstream LLC (NYSE:ENLC) going to take off soon? The smart money is buying. The number of bullish hedge fund positions advanced by 3 lately. Our calculations also showed that enlc isn’t among the 30 most popular stocks among hedge funds. ENLC was in 13 hedge funds’ portfolios at the end of September. There were 10 hedge funds in our database with ENLC holdings 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.
Let’s go over the fresh hedge fund action surrounding EnLink Midstream LLC (NYSE:ENLC).
How have hedgies been trading EnLink Midstream LLC (NYSE:ENLC)?
Heading into the fourth quarter of 2018, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 30% from the previous quarter. By comparison, 7 hedge funds held shares or bullish call options in ENLC heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, HBK Investments held the most valuable stake in EnLink Midstream LLC (NYSE:ENLC), which was worth $30.1 million at the end of the third quarter. On the second spot was Millennium Management which amassed $15.7 million worth of shares. Moreover, Renaissance Technologies, Citadel Investment Group, and PDT Partners were also bullish on EnLink Midstream LLC (NYSE:ENLC), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, specific money managers have jumped into EnLink Midstream LLC (NYSE:ENLC) headfirst. Renaissance Technologies, managed by Jim Simons, created the most outsized position in EnLink Midstream LLC (NYSE:ENLC). Renaissance Technologies had $5 million invested in the company at the end of the quarter. Peter Algert and Kevin Coldiron’s Algert Coldiron Investors also initiated a $0.5 million position during the quarter. The only other fund with a brand new ENLC position is Ken Griffin’s Citadel Investment Group.
Let’s also examine hedge fund activity in other stocks similar to EnLink Midstream LLC (NYSE:ENLC). We will take a look at International Bancshares Corp (NASDAQ:IBOC), NuStar Energy L.P. (NYSE:NS), SailPoint Technologies Holdings, Inc. (NYSE:SAIL), and White Mountains Insurance Group Ltd (NYSE:WTM). This group of stocks’ market caps are similar to ENLC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IBOC | 16 | 188481 | 0 |
| NS | 2 | 2988 | 0 |
| SAIL | 17 | 283382 | 2 |
| WTM | 16 | 188873 | 3 |
| Average | 12.75 | 165931 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $60 million in ENLC’s case. SailPoint Technologies Holdings, Inc. (NYSE:SAIL) is the most popular stock in this table. On the other hand NuStar Energy L.P. (NYSE:NS) is the least popular one with only 2 bullish hedge fund positions. EnLink Midstream LLC (NYSE:ENLC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SAIL might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
