Is ETR Stock A Buy or Sell?

At Insider Monkey, we pore over the filings of nearly 887 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of December 31st. In this article, we will use that wealth of knowledge to determine whether or not Entergy Corporation (NYSE:ETR) makes for a good investment right now.

Is ETR stock a buy? Entergy Corporation (NYSE:ETR) was in 36 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. ETR has seen an increase in hedge fund interest of late. There were 27 hedge funds in our database with ETR positions at the end of the third quarter. Our calculations also showed that ETR isn’t among the 30 most popular stocks among hedge funds (click for Q4 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 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Stuart Zimmer of Zimmer Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this psychedelic-drug startup. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Now let’s analyze the latest hedge fund action surrounding Entergy Corporation (NYSE:ETR).

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

At fourth quarter’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from one quarter earlier. On the other hand, there were a total of 31 hedge funds with a bullish position in ETR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

The largest stake in Entergy Corporation (NYSE:ETR) was held by Citadel Investment Group, which reported holding $186.7 million worth of stock at the end of December. It was followed by D E Shaw with a $150 million position. Other investors bullish on the company included Millennium Management, Renaissance Technologies, and Zimmer Partners. In terms of the portfolio weights assigned to each position Huber Capital Management allocated the biggest weight to Entergy Corporation (NYSE:ETR), around 2.05% of its 13F portfolio. Jones Road Capital Management is also relatively very bullish on the stock, designating 1.21 percent of its 13F equity portfolio to ETR.

Now, some big names were leading the bulls’ herd. Zimmer Partners, managed by Stuart J. Zimmer, initiated the biggest position in Entergy Corporation (NYSE:ETR). Zimmer Partners had $48.8 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $10.8 million investment in the stock during the quarter. The other funds with brand new ETR positions are Nicholas Bagnall’s Te Ahumairangi Investment Management, Aaron Wertentheil’s Jones Road Capital Management, and Charles Davidson and Joseph Jacobs’s Wexford Capital.

Let’s now review hedge fund activity in other stocks similar to Entergy Corporation (NYSE:ETR). We will take a look at AmerisourceBergen Corporation (NYSE:ABC), EXACT Sciences Corporation (NASDAQ:EXAS), Teradyne, Inc. (NYSE:TER), POSCO (NYSE:PKX), Laboratory Corp. of America Holdings (NYSE:LH), Vulcan Materials Company (NYSE:VMC), and Fifth Third Bancorp (NASDAQ:FITB). This group of stocks’ market values are closest to ETR’s market value.

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As you can see these stocks had an average of 42.4 hedge funds with bullish positions and the average amount invested in these stocks was $1121 million. That figure was $830 million in ETR’s case. Laboratory Corp. of America Holdings (NYSE:LH) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 10 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 63.2. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 7.9% in 2021 through April 1st and surpassed the market again by 0.4 percentage points. Unfortunately ETR wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); ETR investors were disappointed as the stock returned 0.8% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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

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