Should You Avoid Energizer Holdings, Inc. (ENR)?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Is Energizer Holdings, Inc. (NYSE:ENR) a buy right now? Investors who are in the know are in a pessimistic mood. The number of long hedge fund bets dropped by 8 in recent months. 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 Sears Holdings Corporation (NASDAQ:SHLD), Proofpoint Inc (NASDAQ:PFPT), and SINA Corp (NASDAQ:SINA) to gather more data points.

According to most investors, hedge funds are perceived as underperforming, outdated financial tools of years past. While there are over 8000 funds with their doors open today, Our experts look at the top tier of this group, about 700 funds. Most estimates calculate that this group of people orchestrate most of all hedge funds’ total capital, and by watching their first-class investments, Insider Monkey has formulated numerous investment strategies that have historically exceeded Mr. Market. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.

With all of this in mind, let’s review the recent action encompassing Energizer Holdings, Inc. (NYSE:ENR).

What does the smart money think about Energizer Holdings, Inc. (NYSE:ENR)?

Heading into Q4, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a slump of 26% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Kenneth Mario Garschina’s Mason Capital Management has the largest position in Energizer Holdings, Inc. (NYSE:ENR), worth close to $93.1 million, accounting for 2% of its total 13F portfolio. Coming in second is Mario Gabelli of GAMCO Investors, with a $51.1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other peers that are bullish comprise Joel Greenblatt’s Gotham Asset Management, Ken Griffin’s Citadel Investment Group and D. E. Shaw’s D E Shaw.

Judging by the fact that Energizer Holdings, Inc. (NYSE:ENR) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few hedge funds that elected to cut their full holdings in the third quarter. Interestingly, Kenneth Mario Garschina’s Mason Capital Management said goodbye to the largest investment of the 700 funds followed by Insider Monkey, comprising close to $405.8 million in stock, and Mario Gabelli’s GAMCO Investors was right behind this move, as the fund said goodbye to about $162.3 million worth of ENR shares. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 8 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Energizer Holdings, Inc. (NYSE:ENR). We will take a look at Sears Holdings Corporation (NASDAQ:SHLD), Proofpoint Inc (NASDAQ:PFPT), SINA Corp (NASDAQ:SINA), and EverBank Financial Corp (NYSE:EVER). All of these stocks’ market caps resemble ENR’s market cap.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $605 million, while in the case of ENR that figure was $336 million. Sears Holdings Corporation (NASDAQ:SHLD) is the most popular stock in this table. On the other hand EverBank Financial Corp (NYSE:EVER) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Energizer Holdings, Inc. (NYSE:ENR) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.