There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Enable Midstream Partners LP (NYSE:ENBL).
Enable Midstream Partners LP (NYSE:ENBL) has seen an increase in enthusiasm from smart money of late. ENBL was in 4 hedge funds’ portfolios at the end of September. There were 2 hedge funds in our database with ENBL positions at the end of the previous quarter. 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 Liberty Broadband Corp (NASDAQ:LBRDA), The Hain Celestial Group, Inc. (NASDAQ:HAIN), and AMC Networks Inc (NASDAQ:AMCX) to gather more data points.
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With all of this in mind, we’re going to analyze the recent action surrounding Enable Midstream Partners LP (NYSE:ENBL).
What have hedge funds been doing with Enable Midstream Partners LP (NYSE:ENBL)?
At Q3’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 100% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, George Hall’s Clinton Group has the number one position in Enable Midstream Partners LP (NYSE:ENBL), worth close to $0.2 million, comprising less than 0.1% of its total 13F portfolio. Coming in second is Zimmer Partners, led by Stuart J. Zimmer, holding a $0.2 million position; less than 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish comprise Ken Griffin’s Citadel Investment Group, and David Dreman’s Dreman Value Management.
As one would reasonably expect, key money managers have jumped into Enable Midstream Partners LP (NYSE:ENBL) headfirst. Clinton Group, managed by George Hall, created the largest position in Enable Midstream Partners LP (NYSE:ENBL). Clinton Group had $0.2 million invested in the company at the end of the quarter. Stuart J. Zimmer’s Zimmer Partners also initiated a $0.2 million position during the quarter. The only other fund with a new position in the stock is David Dreman’s Dreman Value Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Enable Midstream Partners LP (NYSE:ENBL) but similarly valued. We will take a look at Liberty Broadband Corp (NASDAQ:LBRDA), The Hain Celestial Group, Inc. (NASDAQ:HAIN), AMC Networks Inc (NASDAQ:AMCX), and Cytec Industries Inc (NYSE:CYT). This group of stocks’ market values match ENBL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LBRDA | 25 | 321759 | -5 |
| HAIN | 29 | 416389 | 14 |
| AMCX | 24 | 470590 | 5 |
| CYT | 34 | 849833 | 18 |
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $515 million. That figure was $1 million in ENBL’s case. Cytec Industries Inc (NYSE:CYT) is the most popular stock in this table. On the other hand AMC Networks Inc (NASDAQ:AMCX) is the least popular one with only 24 bullish hedge fund positions. Compared to these stocks Enable Midstream Partners LP (NYSE:ENBL) is even less popular than AMCX. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.