As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about Envela Corporation (NYSE:ELA).
Is ELA a good stock to buy? Envela Corporation (NYSE:ELA) was in 4 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 3. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ELA shareholders have witnessed an increase in hedge fund interest lately. There were 2 hedge funds in our database with ELA holdings at the end of December. Our calculations also showed that ELA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Nick Thakore of Diametric Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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 we’re going to take a look at the fresh hedge fund action encompassing Envela Corporation (NYSE:ELA).
Do Hedge Funds Think ELA Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from the previous quarter. By comparison, 2 hedge funds held shares or bullish call options in ELA a year ago. With the smart money’s sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the largest position in Envela Corporation (NYSE:ELA). Renaissance Technologies has a $1.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is Nick Thakore of Diametric Capital, with a $0.4 million position; 0.3% of its 13F portfolio is allocated to the stock. Some other professional money managers that hold long positions include Louis Navellier’s Navellier & Associates, Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) and . In terms of the portfolio weights assigned to each position Diametric Capital allocated the biggest weight to Envela Corporation (NYSE:ELA), around 0.27% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to ELA.
With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Diametric Capital, managed by Nick Thakore, initiated the most outsized position in Envela Corporation (NYSE:ELA). Diametric Capital had $0.4 million invested in the company at the end of the quarter. Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital) also made a $0.2 million investment in the stock during the quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Envela Corporation (NYSE:ELA) but similarly valued. We will take a look at Hawthorn Bancshares, Inc. (NASDAQ:HWBK), Middlefield Banc Corp. (NASDAQ:MBCN), Vislink Technologies, Inc. (NASDAQ:VISL), Blueknight Energy Partners L.P. (NASDAQ:BKEP), Union Bankshares, Inc. (NASDAQ:UNB), AEterna Zentaris Inc. (NASDAQ:AEZS), and Oblong Inc. (NYSE:OBLG). This group of stocks’ market valuations are similar to ELA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HWBK | 2 | 1981 | 1 |
| MBCN | 3 | 12270 | 0 |
| VISL | 4 | 588 | 3 |
| BKEP | 4 | 13718 | 1 |
| UNB | 2 | 1571 | 0 |
| AEZS | 3 | 963 | 2 |
| OBLG | 3 | 25393 | 2 |
| Average | 3 | 8069 | 1.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 3 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $2 million in ELA’s case. Vislink Technologies, Inc. (NASDAQ:VISL) is the most popular stock in this table. On the other hand Hawthorn Bancshares, Inc. (NASDAQ:HWBK) is the least popular one with only 2 bullish hedge fund positions. Envela Corporation (NYSE:ELA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ELA is 87. 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 17.2% in 2021 through June 11th and still beat the market by 3.3 percentage points. Hedge funds were also right about betting on ELA as the stock returned 16.1% since the end of Q1 (through 6/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.