Is EPD Stock A Buy or Sell?
In this article we will analyze whether Enterprise Products Partners L.P. (NYSE:EPD) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is EPD stock a buy? Hedge fund interest in Enterprise Products Partners L.P. (NYSE:EPD) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EPD isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). At the end of this article we will also compare EPD to other stocks including ConocoPhillips (NYSE:COP), General Dynamics Corporation (NYSE:GD), and IDEXX Laboratories, Inc. (NASDAQ:IDXX) to get a better sense of its popularity.
David Tepper of Appaloosa Management LP
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Do Hedge Funds Think EPD Is A Good Stock To Buy Now?
At Q4's end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the third quarter of 2020. On the other hand, there were a total of 28 hedge funds with a bullish position in EPD a year ago. With hedge funds' capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Appaloosa Management LP, managed by David Tepper, holds the most valuable position in Enterprise Products Partners L.P. (NYSE:EPD). Appaloosa Management LP has a $67.6 million position in the stock, comprising 1% of its 13F portfolio. The second largest stake is held by Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $62.4 million position; 0.1% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors with similar optimism consist of Louis Bacon's Moore Global Investments, Stuart J. Zimmer's Zimmer Partners and Allan Teh's Kamunting Street Capital. In terms of the portfolio weights assigned to each position Heronetta Management allocated the biggest weight to Enterprise Products Partners L.P. (NYSE:EPD), around 13.51% of its 13F portfolio. Kamunting Street Capital is also relatively very bullish on the stock, dishing out 9.42 percent of its 13F equity portfolio to EPD.
Seeing as Enterprise Products Partners L.P. (NYSE:EPD) has faced falling interest from the entirety of the hedge funds we track, it's safe to say that there exists a select few hedgies who were dropping their entire stakes by the end of the fourth quarter. At the top of the heap, Jerome L. Simon's Lonestar Capital Management sold off the largest position of the 750 funds watched by Insider Monkey, comprising about $5.2 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund dropped about $1.1 million worth. These moves are interesting, 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 Enterprise Products Partners L.P. (NYSE:EPD) but similarly valued. We will take a look at ConocoPhillips (NYSE:COP), General Dynamics Corporation (NYSE:GD), IDEXX Laboratories, Inc. (NASDAQ:IDXX), Constellation Brands, Inc. (NYSE:STZ), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), The Kraft Heinz Company (NASDAQ:KHC), and Metlife Inc (NYSE:MET). This group of stocks' market values are similar to EPD's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COP,49,687393,4 GD,40,4955250,3 IDXX,46,2697821,5 STZ,58,1768371,5 SMFG,10,92749,2 KHC,36,11558217,-3 MET,37,983027,1 Average,39.4,3248975,2.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 39.4 hedge funds with bullish positions and the average amount invested in these stocks was $3249 million. That figure was $317 million in EPD's case. Constellation Brands, Inc. (NYSE:STZ) is the most popular stock in this table. On the other hand Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG) is the least popular one with only 10 bullish hedge fund positions. Enterprise Products Partners L.P. (NYSE:EPD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EPD is 55.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. A small number of hedge funds were also right about betting on EPD as the stock returned 20% since the end of the fourth quarter (through 4/12) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
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