Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Enphase Energy Inc (NASDAQ:ENPH) was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. ENPH investors should pay attention to an increase in enthusiasm from smart money lately. There were 7 hedge funds in our database with ENPH holdings at the end of the previous quarter. At the end of this article we will also compare ENPH to other stocks including XOMA Corp (NASDAQ:XOMA), ProNAi Therapeutics Inc (NASDAQ:DNAI), and CytRx Corporation (NASDAQ:CYTR) to get a better sense of its popularity.
Follow Enphase Energy Inc. (NASDAQ:ENPH)
Follow Enphase Energy Inc. (NASDAQ:ENPH)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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Keeping this in mind, let’s review the key action regarding Enphase Energy Inc (NASDAQ:ENPH).
What have hedge funds been doing with Enphase Energy Inc (NASDAQ:ENPH)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from the second quarter of 2016. By comparison, 7 hedge funds held shares or bullish call options in ENPH heading into this year. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Dan Loeb’s Third Point holds the most valuable position in Enphase Energy Inc (NASDAQ:ENPH) which has a $7.4 million position in the stock. Some other hedge funds and institutional investors that are bullish consist of Wojciech Uzdelewicz’s Espalier Global Management, Sander Gerber’s Hudson Bay Capital Management and Brett Hendrickson’s Nokomis Capital. We should note that Hudson Bay Capital Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, some big names were leading the bulls’ herd. Granite Point Capital assembled the most valuable position in Enphase Energy Inc (NASDAQ:ENPH) which had $0.9 million invested in the company at the end of the quarter. Wojciech Uzdelewicz’s Espalier Global Management also made a $0.7 million investment in the stock during the quarter.
Let’s now take a look at hedge fund activity in other stocks similar to Enphase Energy Inc (NASDAQ:ENPH). We will take a look at XOMA Corp (NASDAQ:XOMA), ProNAi Therapeutics Inc (NASDAQ:DNAI), CytRx Corporation (NASDAQ:CYTR), and VAALCO Energy, Inc. (NYSE:EGY). This group of stocks’ market valuations are similar to ENPH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| XOMA | 9 | 2293 | -1 |
| DNAI | 8 | 9093 | -1 |
| CYTR | 7 | 5519 | 1 |
| EGY | 9 | 4988 | 4 |
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $5 million. That figure was $10 million in ENPH’s case. XOMA Corp (NASDAQ:XOMA) is the most popular stock in this table. On the other hand CytRx Corporation (NASDAQ:CYTR) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Enphase Energy Inc (NASDAQ:ENPH) 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
