Was The Smart Money Right About Piling Into Enphase Energy Inc (ENPH)?

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 Enphase Energy Inc (NASDAQ:ENPH) based on that data.

Enphase Energy Inc (NASDAQ:ENPH) shareholders have witnessed an increase in hedge fund sentiment recently. Enphase Energy Inc (NASDAQ:ENPH) was in 48 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 42. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 42 hedge funds in our database with ENPH positions at the end of the third quarter. Our calculations also showed that ENPH isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

In the 21st century investor’s toolkit there are plenty of gauges stock market investors have at their disposal to size up their holdings. A duo of the most innovative gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best investment managers can outclass the S&P 500 by a very impressive margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Scott Bessent of Key Square Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. Now we’re going to analyze the fresh hedge fund action surrounding Enphase Energy Inc (NASDAQ:ENPH).

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

At fourth quarter’s end, a total of 48 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards ENPH over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Enphase Energy Inc (NASDAQ:ENPH) was held by Sylebra Capital Management, which reported holding $346.2 million worth of stock at the end of December. It was followed by Park West Asset Management with a $89.8 million position. Other investors bullish on the company included Two Sigma Advisors, Millennium Management, and Columbus Circle Investors. In terms of the portfolio weights assigned to each position Sylebra Capital Management allocated the biggest weight to Enphase Energy Inc (NASDAQ:ENPH), around 8.82% of its 13F portfolio. Noked Capital is also relatively very bullish on the stock, setting aside 7.27 percent of its 13F equity portfolio to ENPH.

As one would reasonably expect, key money managers have jumped into Enphase Energy Inc (NASDAQ:ENPH) headfirst. Encompass Capital Advisors, managed by Todd J. Kantor, established the biggest position in Enphase Energy Inc (NASDAQ:ENPH). Encompass Capital Advisors had $34.3 million invested in the company at the end of the quarter. Zach Schreiber’s Point State Capital also made a $31.9 million investment in the stock during the quarter. The other funds with brand new ENPH positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Philip Best’s Quaero Capital, and Scott Bessent’s Key Square Capital Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Enphase Energy Inc (NASDAQ:ENPH) but similarly valued. These stocks are Equity Residential (NYSE:EQR), Arista Networks Inc (NYSE:ANET), Nokia Corporation (NYSE:NOK), W.W. Grainger, Inc. (NYSE:GWW), XP Inc. (NASDAQ:XP), Realty Income Corporation (NYSE:O), and Nasdaq, Inc. (NASDAQ:NDAQ). All of these stocks’ market caps are closest to ENPH’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $386 million. That figure was $988 million in ENPH’s case. Arista Networks Inc (NYSE:ANET) is the most popular stock in this table. On the other hand Nokia Corporation (NYSE:NOK) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Enphase Energy Inc (NASDAQ:ENPH) is more popular among hedge funds. Our overall hedge fund sentiment score for ENPH is 90. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Unfortunately ENPH wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ENPH were disappointed as the stock returned -20.6% since the end of the fourth quarter (through 4/30) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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