This Metric Says You Are Smart to Buy EnerSys (ENS)

Is EnerSys (NYSE:ENS) a good investment?

Now, according to many of your peers, hedge funds are perceived as useless, old investment tools of a period lost to current times. Although there are more than 8,000 hedge funds in operation currently, Insider Monkey aim at the masters of this club, close to 525 funds. It is widely held that this group has its hands on most of the smart money’s total assets, and by watching their highest quality investments, we’ve formulated a few investment strategies that have historically beaten the S&P 500. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we‘ve began to sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 33 percentage points in 11 months (see all of our picks from August).

Equally as necessary, positive insider trading activity is a second way to analyze the stock market universe. As the old adage goes: there are a variety of reasons for an executive to drop shares of his or her company, but just one, very clear reason why they would buy. Plenty of empirical studies have demonstrated the useful potential of this strategy if shareholders know what to do (learn more here).

Thus, we’re going to examine the recent info about EnerSys (NYSE:ENS).

How have hedgies been trading EnerSys (NYSE:ENS)?

Heading into Q3, a total of 20 of the hedge funds we track were long in this stock, a change of 54% from the first quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings considerably.

Out of the hedge funds we follow, Royce & Associates, managed by Chuck Royce, holds the most valuable position in EnerSys (NYSE:ENS). Royce & Associates has a $166 million position in the stock, comprising 0.5% of its 13F portfolio. On Royce & Associates’s heels is Martin Whitman of Third Avenue Management, with a $48.1 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other peers with similar optimism include David Dreman’s Dreman Value Management, Joel Greenblatt’s Gotham Asset Management and John Overdeck and David Siegel’s Two Sigma Advisors.

Now, specific money managers have jumped into EnerSys (NYSE:ENS) headfirst. Royce & Associates, managed by Chuck Royce, established the most valuable position in EnerSys (NYSE:ENS). Royce & Associates had 166 million invested in the company at the end of the quarter. Martin Whitman’s Third Avenue Management also made a $48.1 million investment in the stock during the quarter. The other funds with brand new ENS positions are David Dreman’s Dreman Value Management, Glenn Russell Dubin’s Highbridge Capital Management, and D. E. Shaw’s D E Shaw.

What do corporate executives and insiders think about EnerSys (NYSE:ENS)?

Insider buying made by high-level executives is best served when the primary stock in question has seen transactions within the past 180 days. Over the latest six-month time frame, EnerSys (NYSE:ENS) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

We’ll also review the relationship between both of these indicators in other stocks similar to EnerSys (NYSE:ENS). These stocks are Littelfuse, Inc. (NASDAQ:LFUS), Franklin Electric Co. (NASDAQ:FELE), Woodward Inc (NASDAQ:WWD), General Cable Corporation (NYSE:BGC), and Belden Inc. (NYSE:BDC). All of these stocks are in the industrial electrical equipment industry and their market caps match ENS’s market cap.

Using the returns explained by the previously mentioned tactics, regular investors should always watch hedge fund and insider trading sentiment, and EnerSys (NYSE:ENS) is an important part of this process.

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