Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Emcor Group Inc (NYSE:EME).
Emcor Group Inc (NYSE:EME) was in 22 hedge funds' portfolios at the end of the second quarter of 2019. EME investors should pay attention to a decrease in hedge fund interest lately. There were 26 hedge funds in our database with EME positions at the end of the previous quarter. Our calculations also showed that EME isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's analyze the fresh hedge fund action regarding Emcor Group Inc (NYSE:EME).
What does smart money think about Emcor Group Inc (NYSE:EME)?
Heading into the third quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -15% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EME over the last 16 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, York Capital Management, managed by James Dinan, holds the number one position in Emcor Group Inc (NYSE:EME). York Capital Management has a $104.3 million position in the stock, comprising 4.2% of its 13F portfolio. The second most bullish fund manager is Cliff Asness of AQR Capital Management, with a $79.1 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that hold long positions encompass Noam Gottesman's GLG Partners, Clint Carlson's Carlson Capital and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital.
Because Emcor Group Inc (NYSE:EME) has witnessed bearish sentiment from the entirety of the hedge funds we track, logic holds that there is a sect of hedgies that elected to cut their positions entirely last quarter. At the top of the heap, Richard S. Meisenberg's ACK Asset Management dumped the largest investment of the "upper crust" of funds watched by Insider Monkey, valued at about $15.9 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also dumped its stock, about $5.7 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 4 funds last quarter.
Let's now review hedge fund activity in other stocks similar to Emcor Group Inc (NYSE:EME). We will take a look at Flowers Foods, Inc. (NYSE:FLO), CIT Group Inc. (NYSE:CIT), EnLink Midstream LLC (NYSE:ENLC), and Choice Hotels International, Inc. (NYSE:CHH). This group of stocks' market valuations are closest to EME's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FLO,22,201700,4 CIT,25,878786,0 ENLC,12,39620,2 CHH,19,193292,1 Average,19.5,328350,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $328 million. That figure was $351 million in EME's case. CIT Group Inc. (NYSE:CIT) is the most popular stock in this table. On the other hand EnLink Midstream LLC (NYSE:ENLC) is the least popular one with only 12 bullish hedge fund positions. Emcor Group Inc (NYSE:EME) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately EME wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EME were disappointed as the stock returned -2.2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks (view the video below) among hedge funds as many of these stocks already outperformed the market so far this year. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.