We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Essent Group Ltd (NYSE:ESNT) based on that data.
Is ESNT stock a buy? Essent Group Ltd (NYSE:ESNT) shareholders have witnessed an increase in activity from the world’s largest hedge funds in recent months. Essent Group Ltd (NYSE:ESNT) was in 32 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 36. Our calculations also showed that ESNT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 S&P 500 ETFs by 124 percentage points since March 2017 (see the details here).
Joel Greenblatt of Gotham Asset Management
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Do Hedge Funds Think ESNT Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 45% from the third quarter of 2020. By comparison, 36 hedge funds held shares or bullish call options in ESNT a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Essent Group Ltd (NYSE:ESNT) was held by Rima Senvest Management, which reported holding $110.2 million worth of stock at the end of December. It was followed by Polar Capital with a $102.6 million position. Other investors bullish on the company included Millennium Management, Intrinsic Edge Capital, and BlueMar Capital Management. In terms of the portfolio weights assigned to each position Rima Senvest Management allocated the biggest weight to Essent Group Ltd (NYSE:ESNT), around 4.3% of its 13F portfolio. Beach Point Capital Management is also relatively very bullish on the stock, designating 1.88 percent of its 13F equity portfolio to ESNT.
As aggregate interest increased, specific money managers were breaking ground themselves. Intrinsic Edge Capital, managed by Mark Coe, created the biggest position in Essent Group Ltd (NYSE:ESNT). Intrinsic Edge Capital had $8.4 million invested in the company at the end of the quarter. Peter Seuss’s Prana Capital Management also initiated a $5 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Ken Grossman and Glen Schneider’s SG Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Essent Group Ltd (NYSE:ESNT) but similarly valued. These stocks are Pacific Biosciences of California (NASDAQ:PACB), LiveRamp Holdings, Inc. (NYSE:RAMP), IDACORP Inc (NYSE:IDA), NCR Corporation (NYSE:NCR), SailPoint Technologies Holdings, Inc. (NYSE:SAIL), Curtiss-Wright Corp. (NYSE:CW), and TFI International Inc. (NYSE:TFII). All of these stocks’ market caps are closest to ESNT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PACB | 23 | 1483936 | -2 |
| RAMP | 24 | 257256 | -4 |
| IDA | 14 | 167230 | -17 |
| NCR | 32 | 483312 | 0 |
| SAIL | 32 | 1002995 | 3 |
| CW | 23 | 245187 | -3 |
| TFII | 10 | 78114 | -3 |
| Average | 22.6 | 531147 | -3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $531 million. That figure was $296 million in ESNT’s case. NCR Corporation (NYSE:NCR) is the most popular stock in this table. On the other hand TFI International Inc. (NYSE:TFII) is the least popular one with only 10 bullish hedge fund positions. Essent Group Ltd (NYSE:ESNT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ESNT is 86.7. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on ESNT as the stock returned 13.6% since the end of Q4 (through 4/12) 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.
