Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the fourth quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of ENGlobal Corp (NASDAQ:ENG) based on that data.
Is ENG a good stock to buy? Hedge fund interest in ENGlobal Corp (NASDAQ:ENG) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that ENG isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 DLH Holdings Corp. (NASDAQ:DLHC), Geospace Technologies Corp (NASDAQ:GEOS), and Galectin Therapeutics Inc. (NASDAQ:GALT) to gather more data points.
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 S&P 500 ETFs by 115 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 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.
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 wants to buy this $26 biotech stock for $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 we're going to take a gander at the fresh hedge fund action encompassing ENGlobal Corp (NASDAQ:ENG).
Do Hedge Funds Think ENG Is A Good Stock To Buy Now?
At first quarter's end, a total of 3 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ENG over the last 23 quarters. With hedgies' capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Citadel Investment Group, managed by Ken Griffin, holds the largest position in ENGlobal Corp (NASDAQ:ENG). Citadel Investment Group has a $0.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $0.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions contain Ken Griffin's Citadel Investment Group, Daniel S. Och's OZ Management and . In terms of the portfolio weights assigned to each position OZ Management allocated the biggest weight to ENGlobal Corp (NASDAQ:ENG), around 0.0007% of its 13F portfolio. Millennium Management is also relatively very bullish on the stock, earmarking 0.0003 percent of its 13F equity portfolio to ENG.
Seeing as ENGlobal Corp (NASDAQ:ENG) has faced a decline in interest from the entirety of the hedge funds we track, it's safe to say that there lies a certain "tier" of hedgies who sold off their full holdings by the end of the first quarter. Intriguingly, Renaissance Technologies sold off the biggest stake of the 750 funds followed by Insider Monkey, comprising about $1.6 million in stock. Ryan Tolkin (CIO)'s fund, Schonfeld Strategic Advisors, also cut its stock, about $0.1 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as ENGlobal Corp (NASDAQ:ENG) but similarly valued. We will take a look at DLH Holdings Corp. (NASDAQ:DLHC), Geospace Technologies Corp (NASDAQ:GEOS), Galectin Therapeutics Inc. (NASDAQ:GALT), Q&K International Group Limited (NASDAQ:QK), Biolase Inc (NASDAQ:BIOL), iMedia Brands, Inc. (NASDAQ:IMBI), and Old Point Financial Corporation (NASDAQ:OPOF). This group of stocks' market caps match ENG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DLHC,6,46235,-2 GEOS,5,8506,-3 GALT,3,791,-1 QK,1,34,0 BIOL,3,2375,0 IMBI,5,11520,3 OPOF,2,1411,0 Average,3.6,10125,-0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $1 million in ENG's case. DLH Holdings Corp. (NASDAQ:DLHC) is the most popular stock in this table. On the other hand Q&K International Group Limited (NASDAQ:QK) is the least popular one with only 1 bullish hedge fund positions. ENGlobal Corp (NASDAQ:ENG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ENG is 55. 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 17.2% in 2021 through June 11th and surpassed the market again by 3.3 percentage points. Unfortunately ENG wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); ENG investors were disappointed as the stock returned -37.8% since the end of March (through 6/11) 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.