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Endo International plc (ENDP): Are Hedge Funds Right About This Stock?

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How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Endo International plc (NASDAQ:ENDP).

Is Endo International plc (NASDAQ:ENDP) a good stock to buy now? Prominent investors were in an optimistic mood. The number of long hedge fund bets rose by 1 in recent months. Endo International plc (NASDAQ:ENDP) was in 21 hedge funds' portfolios at the end of September. The all time high for this statistic is 61. Our calculations also showed that ENDP isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Billionaire John Paulson's top 10 stock picks
Billionaire John Paulson's top 10 stock picks

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Keeping this in mind we're going to check out the recent hedge fund action regarding Endo International plc (NASDAQ:ENDP).

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

Heading into the fourth quarter of 2021, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in ENDP a year ago. With hedge funds' sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Is ENDP A Good Stock To Buy?
Is ENDP A Good Stock To Buy?

The largest stake in Endo International plc (NASDAQ:ENDP) was held by Paulson & Co, which reported holding $56.1 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $54.6 million position. Other investors bullish on the company included Glenview Capital, Millennium Management, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Paulson & Co allocated the biggest weight to Endo International plc (NASDAQ:ENDP), around 1.6% of its 13F portfolio. Glenview Capital is also relatively very bullish on the stock, setting aside 0.39 percent of its 13F equity portfolio to ENDP.

As one would reasonably expect, some big names have jumped into Endo International plc (NASDAQ:ENDP) headfirst. North Fourth Asset Management, managed by Anthony Joseph Vaccarino, established the most valuable position in Endo International plc (NASDAQ:ENDP). North Fourth Asset Management had $0.3 million invested in the company at the end of the quarter. Ben Levine, Andrew Manuel and Stefan Renold's LMR Partners also initiated a $0.1 million position during the quarter. The other funds with brand new ENDP positions are William Michaelcheck's Mariner Investment Group, Peter Algert's Algert Global, and Karim Abbadi and Edward McBride's Centiva Capital.

Let's go over hedge fund activity in other stocks similar to Endo International plc (NASDAQ:ENDP). These stocks are OneSpan Inc. (NASDAQ:OSPN), Crossamerica Partners LP (NYSE:CAPL), ChannelAdvisor Corp (NYSE:ECOM), Eos Energy Enterprises, Inc. (NASDAQ:EOSE), Community Trust Bancorp, Inc. (NASDAQ:CTBI), Xos Inc. (NASDAQ:XOS), and Orthofix Medical Inc (NASDAQ:OFIX). This group of stocks' market valuations are similar to ENDP's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSPN,15,135178,5 CAPL,2,908,0 ECOM,15,94050,2 EOSE,5,5979,-2 CTBI,10,15810,0 XOS,20,34908,20 OFIX,18,101552,1 Average,12.1,55484,3.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.1 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $158 million in ENDP's case. Xos Inc. (NASDAQ:XOS) is the most popular stock in this table. On the other hand Crossamerica Partners LP (NYSE:CAPL) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Endo International plc (NASDAQ:ENDP) is more popular among hedge funds. Our overall hedge fund sentiment score for ENDP is 66.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 29.6% in 2021 and managed to beat the market by 3.6 percentage points. Hedge funds were also right about betting on ENDP as the stock returned 16% since the end of September (through 12/31) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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