Is EnPro Industries, Inc. (NYSE:NPO) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is EnPro Industries, Inc. (NYSE:NPO) going to take off soon? The smart money is turning bullish. The number of long hedge fund bets went up by 2 lately. Our calculations also showed that npo isn’t among the 30 most popular stocks among hedge funds.
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 40 percentage points since May 2014 through May 30, 2019 (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 review the latest hedge fund action encompassing EnPro Industries, Inc. (NYSE:NPO).
How are hedge funds trading EnPro Industries, Inc. (NYSE:NPO)?
At Q1’s end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. The graph below displays the number of hedge funds with bullish position in NPO over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GAMCO Investors held the most valuable stake in EnPro Industries, Inc. (NYSE:NPO), which was worth $83.4 million at the end of the first quarter. On the second spot was Daruma Asset Management which amassed $26.1 million worth of shares. Moreover, GLG Partners, Millennium Management, and Marshall Wace LLP were also bullish on EnPro Industries, Inc. (NYSE:NPO), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, key hedge funds have jumped into EnPro Industries, Inc. (NYSE:NPO) headfirst. Laurion Capital Management, managed by Benjamin A. Smith, assembled the most valuable position in EnPro Industries, Inc. (NYSE:NPO). Laurion Capital Management had $0.6 million invested in the company at the end of the quarter. David Costen Haley’s HBK Investments also initiated a $0.6 million position during the quarter. The following funds were also among the new NPO investors: John Overdeck and David Siegel’s Two Sigma Advisors and Jeffrey Talpins’s Element Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as EnPro Industries, Inc. (NYSE:NPO) but similarly valued. We will take a look at Kite Realty Group Trust (NYSE:KRG), U.S. Physical Therapy, Inc. (NYSE:USPH), Bandwidth Inc. (NASDAQ:BAND), and Phibro Animal Health Corp (NASDAQ:PAHC). This group of stocks’ market valuations match NPO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KRG | 6 | 38694 | -1 |
| USPH | 13 | 78307 | 2 |
| BAND | 23 | 209148 | 4 |
| PAHC | 18 | 64469 | -2 |
| Average | 15 | 97655 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $98 million. That figure was $147 million in NPO’s case. Bandwidth Inc. (NASDAQ:BAND) is the most popular stock in this table. On the other hand Kite Realty Group Trust (NYSE:KRG) is the least popular one with only 6 bullish hedge fund positions. EnPro Industries, Inc. (NYSE:NPO) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately NPO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on NPO were disappointed as the stock returned -0.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
