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In this article we are going to use hedge fund sentiment as a tool and determine whether EnerSys (NYSE:ENS) is a good investment right now. We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
Is ENS a good stock to buy now? EnerSys (NYSE:ENS) has experienced a decrease in support from the world's most elite money managers in recent months. EnerSys (NYSE:ENS) was in 22 hedge funds' portfolios at the end of September. The all time high for this statistic is 26. There were 26 hedge funds in our database with ENS holdings at the end of June. Our calculations also showed that ENS 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.
In the 21st century investor’s toolkit there are a lot of tools stock market investors have at their disposal to value publicly traded companies. A couple of the less utilized tools are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outpace the broader indices by a solid amount (see the details here).
Philip Hempleman of Ardsley Partners
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 let's analyze the key hedge fund action regarding EnerSys (NYSE:ENS).
Do Hedge Funds Think ENS Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ENS over the last 21 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Rubric Capital Management was the largest shareholder of EnerSys (NYSE:ENS), with a stake worth $25.8 million reported as of the end of September. Trailing Rubric Capital Management was ACK Asset Management, which amassed a stake valued at $16.5 million. One Fin Capital Management, AQR Capital Management, and Skylands Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position ACK Asset Management allocated the biggest weight to EnerSys (NYSE:ENS), around 8.48% of its 13F portfolio. One Fin Capital Management is also relatively very bullish on the stock, designating 8.34 percent of its 13F equity portfolio to ENS.
Because EnerSys (NYSE:ENS) has experienced declining sentiment from hedge fund managers, logic holds that there exists a select few hedgies that decided to sell off their positions entirely in the third quarter. At the top of the heap, Mark Coe's Intrinsic Edge Capital sold off the largest position of the 750 funds tracked by Insider Monkey, valued at close to $15.5 million in stock. Jeffrey Gendell's fund, Tontine Asset Management, also said goodbye to its stock, about $4.8 million worth. These transactions are interesting, as total hedge fund interest fell by 4 funds in the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to EnerSys (NYSE:ENS). These stocks are Sorrento Therapeutics Inc (NASDAQ:SRNE), NCR Corporation (NYSE:NCR), Cogent Communications Holdings Inc. (NASDAQ:CCOI), TechnipFMC plc (NYSE:FTI), Sabra Health Care REIT Inc (NASDAQ:SBRA), Acacia Communications, Inc. (NASDAQ:ACIA), and Stitch Fix, Inc. (NASDAQ:SFIX). All of these stocks' market caps match ENS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SRNE,13,100794,1 NCR,32,309659,0 CCOI,28,385884,0 FTI,31,549277,0 SBRA,24,156798,6 ACIA,32,1045851,-2 SFIX,25,235359,-3 Average,26.4,397660,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $398 million. That figure was $108 million in ENS's case. NCR Corporation (NYSE:NCR) is the most popular stock in this table. On the other hand Sorrento Therapeutics Inc (NASDAQ:SRNE) is the least popular one with only 13 bullish hedge fund positions. EnerSys (NYSE:ENS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for ENS is 50.1. 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 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on ENS as the stock returned 24.8% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.