Is Entergy Corporation (ETR) A Good Stock To Buy?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Entergy Corporation (NYSE:ETR) based on that data.

Is ETR a good stock to buy? Hedge fund interest in Entergy Corporation (NYSE:ETR) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ETR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as L Brands Inc (NYSE:LB), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), and Lyft, Inc. (NASDAQ:LYFT) to gather more data points.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Michael Gelband of ExodusPoint Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind let’s check out the recent hedge fund action regarding Entergy Corporation (NYSE:ETR).

Do Hedge Funds Think ETR Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards ETR over the last 24 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Entergy Corporation (NYSE:ETR) was held by Citadel Investment Group, which reported holding $175.4 million worth of stock at the end of June. It was followed by Millennium Management with a $126.3 million position. Other investors bullish on the company included ExodusPoint Capital, D E Shaw, and AQR Capital Management. In terms of the portfolio weights assigned to each position Coann Capital allocated the biggest weight to Entergy Corporation (NYSE:ETR), around 3.08% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, dishing out 0.99 percent of its 13F equity portfolio to ETR.

Seeing as Entergy Corporation (NYSE:ETR) has faced bearish sentiment from the aggregate hedge fund industry, logic holds that there exists a select few fund managers who were dropping their full holdings in the second quarter. Interestingly, John Overdeck and David Siegel’s Two Sigma Advisors dropped the largest investment of all the hedgies followed by Insider Monkey, totaling an estimated $35.7 million in stock, and Alec Litowitz and Ross Laser’s Magnetar Capital was right behind this move, as the fund said goodbye to about $1.9 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Entergy Corporation (NYSE:ETR). We will take a look at L Brands Inc (NYSE:LB), Alnylam Pharmaceuticals, Inc. (NASDAQ:ALNY), Lyft, Inc. (NASDAQ:LYFT), Avangrid, Inc. (NYSE:AGR), Wheaton Precious Metals Corp. (NYSE:WPM), Devon Energy Corporation (NYSE:DVN), and Albemarle Corporation (NYSE:ALB). This group of stocks’ market values are closest to ETR’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 35 hedge funds with bullish positions and the average amount invested in these stocks was $1492 million. That figure was $595 million in ETR’s case. L Brands Inc (NYSE:LB) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 12 bullish hedge fund positions. Entergy Corporation (NYSE:ETR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ETR is 54. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on ETR as the stock returned 3.5% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.