Should I Avoid Ennis, Inc. (EBF)?
A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on Ennis, Inc. (NYSE:EBF).
Is Ennis, Inc. (NYSE:EBF) going to take off soon? The smart money was taking a bearish view. The number of long hedge fund bets shrunk by 2 lately. Ennis, Inc. (NYSE:EBF) was in 8 hedge funds' portfolios at the end of September. The all time high for this statistics is 16. Our calculations also showed that EBF isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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.
Cliff Asness of AQR Capital Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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. Keeping this in mind we're going to take a look at the new hedge fund action encompassing Ennis, Inc. (NYSE:EBF).
Hedge fund activity in Ennis, Inc. (NYSE:EBF)
At third quarter's end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EBF over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey's hedge fund database, Renaissance Technologies has the number one position in Ennis, Inc. (NYSE:EBF), worth close to $36.9 million, comprising less than 0.1%% of its total 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $17.4 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining professional money managers with similar optimism encompass Cliff Asness's AQR Capital Management, Ken Griffin's Citadel Investment Group and David Harding's Winton Capital Management. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Ennis, Inc. (NYSE:EBF), around 1.12% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, earmarking 0.19 percent of its 13F equity portfolio to EBF.
Seeing as Ennis, Inc. (NYSE:EBF) has witnessed falling interest from the aggregate hedge fund industry, it's safe to say that there exists a select few money managers that elected to cut their positions entirely in the third quarter. It's worth mentioning that Paul Marshall and Ian Wace's Marshall Wace LLP sold off the biggest investment of the 750 funds monitored by Insider Monkey, totaling an estimated $1.4 million in stock. Louis Navellier's fund, Navellier & Associates, also sold off its stock, about $0.5 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 2 funds in the third quarter.
Let's now review hedge fund activity in other stocks similar to Ennis, Inc. (NYSE:EBF). These stocks are Bank First Corporation (NASDAQ:BFC), Digi International Inc. (NASDAQ:DGII), Boston Private Financial Hldg Inc (NASDAQ:BPFH), CrossFirst Bankshares, Inc. (NASDAQ:CFB), Boingo Wireless Inc (NASDAQ:WIFI), Tricida, Inc. (NASDAQ:TCDA), and Blucora Inc (NASDAQ:BCOR). This group of stocks' market caps match EBF's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BFC,1,18,-1 DGII,11,40764,0 BPFH,22,29544,2 CFB,3,8221,-1 WIFI,15,190271,0 TCDA,18,143868,-6 BCOR,18,74419,-2 Average,12.6,69586,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.6 hedge funds with bullish positions and the average amount invested in these stocks was $70 million. That figure was $62 million in EBF's case. Boston Private Financial Hldg Inc (NASDAQ:BPFH) is the most popular stock in this table. On the other hand Bank First Corporation (NASDAQ:BFC) is the least popular one with only 1 bullish hedge fund positions. Ennis, Inc. (NYSE:EBF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EBF is 34.7. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately EBF wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EBF investors were disappointed as the stock returned -4.8% since the end of September (through 12/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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