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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Energous Corporation (NASDAQ:WATT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is WATT a good stock to buy? The best stock pickers were taking an optimistic view. The number of long hedge fund bets inched up by 1 in recent months. Energous Corporation (NASDAQ:WATT) was in 6 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 8. Our calculations also showed that WATT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund owns nearly 40% of this $24 biotech stock and is trying to buy the rest for around $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery 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. Keeping this in mind let's review the recent hedge fund action encompassing Energous Corporation (NASDAQ:WATT).
Do Hedge Funds Think WATT Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WATT over the last 23 quarters. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
The largest stake in Energous Corporation (NASDAQ:WATT) was held by Millennium Management, which reported holding $1 million worth of stock at the end of December. It was followed by OZ Management with a $0.9 million position. Other investors bullish on the company included Citadel Investment Group, Citadel Investment Group, and ExodusPoint Capital. In terms of the portfolio weights assigned to each position OZ Management allocated the biggest weight to Energous Corporation (NASDAQ:WATT), around 0.01% of its 13F portfolio. Engineers Gate Manager is also relatively very bullish on the stock, setting aside 0.0048 percent of its 13F equity portfolio to WATT.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Millennium Management, managed by Israel Englander, established the largest position in Energous Corporation (NASDAQ:WATT). Millennium Management had $1 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new WATT position is Greg Eisner's Engineers Gate Manager.
Let's check out hedge fund activity in other stocks similar to Energous Corporation (NASDAQ:WATT). We will take a look at Orrstown Financial Services, Inc. (NASDAQ:ORRF), Stratus Properties Inc. (NASDAQ:STRS), Professional Holding Corp. (NASDAQ:PFHD), Hamilton Beach Brands Holding Company (NYSE:HBB), Safe Bulkers, Inc. (NYSE:SB), Great Ajax Corp (NYSE:AJX), and Mogo Inc. (NASDAQ:MOGO). This group of stocks' market valuations match WATT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ORRF,4,8233,0 STRS,3,38081,0 PFHD,3,20914,1 HBB,8,10151,2 SB,8,16324,3 AJX,11,9712,3 MOGO,8,29653,4 Average,6.4,19010,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.4 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $3 million in WATT's case. Great Ajax Corp (NYSE:AJX) is the most popular stock in this table. On the other hand Stratus Properties Inc. (NASDAQ:STRS) is the least popular one with only 3 bullish hedge fund positions. Energous Corporation (NASDAQ:WATT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WATT is 47.3. 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. 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 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 gained 19.3% in 2021 through June 25th and surpassed the market again by 4.8 percentage points. Unfortunately WATT wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WATT investors were disappointed as the stock returned -30.3% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.