We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like EDENOR S.A. (NYSE:EDN).
EDENOR S.A. (NYSE:EDN) investors should be aware of a decrease in enthusiasm from smart money lately. Our calculations also showed that EDN isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to 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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a look at the latest hedge fund action regarding EDENOR S.A. (NYSE:EDN).
What does smart money think about EDENOR S.A. (NYSE:EDN)?
At Q2's end, a total of 4 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EDN over the last 16 quarters. With hedge funds' capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Millennium Management, managed by Israel Englander, holds the largest position in EDENOR S.A. (NYSE:EDN). Millennium Management has a $1.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by LMR Partners, led by Ben Levine, Andrew Manuel and Stefan Renold, holding a $1.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish comprise Edmond M. Safra's EMS Capital, and Renaissance Technologies.
Judging by the fact that EDENOR S.A. (NYSE:EDN) has faced a decline in interest from hedge fund managers, logic holds that there was a specific group of money managers who sold off their entire stakes last quarter. At the top of the heap, Kevin D. Eng's Columbus Hill Capital Management dropped the biggest stake of the 750 funds watched by Insider Monkey, valued at about $6.4 million in stock, and Michael Platt and William Reeves's BlueCrest Capital Mgmt. was right behind this move, as the fund sold off about $0.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let's now review hedge fund activity in other stocks similar to EDENOR S.A. (NYSE:EDN). We will take a look at HealthStream, Inc. (NASDAQ:HSTM), MBIA Inc. (NYSE:MBI), Thermon Group Holdings, Inc. (NYSE:THR), and Retrophin Inc (NASDAQ:RTRX). This group of stocks' market caps are similar to EDN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HSTM,13,45722,-1 MBI,18,203227,-1 THR,10,46417,2 RTRX,19,351604,-4 Average,15,161743,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $162 million. That figure was $3 million in EDN's case. Retrophin Inc (NASDAQ:RTRX) is the most popular stock in this table. On the other hand Thermon Group Holdings, Inc. (NYSE:THR) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks EDENOR S.A. (NYSE:EDN) is even less popular than THR. Hedge funds dodged a bullet by taking a bearish stance towards EDN. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately EDN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); EDN investors were disappointed as the stock returned -61.2% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.