Is Enbridge Inc (USA) (NYSE:ENB) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Enbridge Inc (USA) (NYSE:ENB) a good stock to buy now? The smart money is turning less bullish. The number of bullish hedge fund positions were trimmed by 2 in recent months. At the end of this article we will also compare ENB to other stocks, including Canon Inc. (ADR) (NYSE:CAJ), Precision Castparts Corp. (NYSE:PCP), and Tesla Motors Inc (NASDAQ:TSLA) to get a better sense of its popularity. These are Enbridge’s market cap peers.
Follow Enbridge Inc (NYSE:ENB)
Follow Enbridge Inc (NYSE:ENB)
If you’d ask most traders, hedge funds are seen as slow, old financial vehicles of the past. While there are more than 8000 funds in operation today, We look at the bigwigs of this group, around 700 funds. These money managers watch over most of all hedge funds’ total asset base, and by keeping an eye on their finest picks, Insider Monkey has come up with many investment strategies that have historically outrun Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points annually for a decade in their back tests.
With all of this in mind, let’s analyze the recent action regarding Enbridge Inc (USA) (NYSE:ENB).
Hedge fund activity in Enbridge Inc (USA) (NYSE:ENB)
At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -10% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jonathon Jacobson’s Highfields Capital Management has the number one position in Enbridge Inc (USA) (NYSE:ENB), worth close to $150.4 million, amounting to 1.3% of its total 13F portfolio. The second largest stake is held by Luminus Management, managed by Jonathan Barrett and Paul Segal, which holds a $37.3 million position; the fund has 1.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions encompass Vince Maddi and Shawn Brennan’s SIR Capital Management, Eric Sprott’s Sprott Asset Management and D. E. Shaw’s D E Shaw.
Due to the fact that Enbridge Inc (USA) (NYSE:ENB) has experienced a declining sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedge funds who sold off their positions entirely last quarter. Intriguingly, Phill Gross and Robert Atchinson’s Adage Capital Management cut the biggest investment of all the hedgies watched by Insider Monkey, valued at an estimated $110 million in stock. Alec Litowitz and Ross Laser’s fund, Magnetar Capital, also cut its stock, about $94.2 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 2 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Enbridge Inc (USA) (NYSE:ENB) but similarly valued. We will take a look at Canon Inc. (ADR) (NYSE:CAJ), Precision Castparts Corp. (NYSE:PCP), Tesla Motors Inc (NASDAQ:TSLA), and CME Group Inc (NASDAQ:CME). All of these stocks’ market caps match ENB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAJ | 9 | 44714 | 2 |
| PCP | 67 | 6447163 | 15 |
| TSLA | 26 | 1011644 | 0 |
| CME | 42 | 973079 | -3 |
As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $2.12 billion. That figure was $340 million in ENB’s case. Precision Castparts Corp. (NYSE:PCP) is the most popular stock in this table. On the other hand Canon Inc. (ADR) (NYSE:CAJ) is the least popular one with only 9 bullish hedge fund positions. Enbridge Inc (USA) (NYSE:ENB) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PCP might be a better candidate to consider a long position.
