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 June. At Insider Monkey, we follow nearly 750 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 EnLink Midstream LLC (NYSE:ENLC), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
EnLink Midstream LLC (NYSE:ENLC) was in 12 hedge funds' portfolios at the end of June. ENLC shareholders have witnessed an increase in activity from the world's largest hedge funds recently. There were 10 hedge funds in our database with ENLC holdings at the end of the previous quarter. Our calculations also showed that ENLC isn't among the 30 most popular stocks among hedge funds.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely 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. We're going to take a gander at the recent hedge fund action regarding EnLink Midstream LLC (NYSE:ENLC).
How are hedge funds trading EnLink Midstream LLC (NYSE:ENLC)?
At the end of the second quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 20% from the first quarter of 2019. On the other hand, there were a total of 10 hedge funds with a bullish position in ENLC a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Brett Hendrickson's Nokomis Capital has the largest position in EnLink Midstream LLC (NYSE:ENLC), worth close to $14.2 million, accounting for 2.8% of its total 13F portfolio. The second largest stake is held by Ken Griffin of Citadel Investment Group, with a $8.5 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money that are bullish contain John Thiessen's Vertex One Asset Management, Israel Englander's Millennium Management and T Boone Pickens's BP Capital.
Now, some big names have jumped into EnLink Midstream LLC (NYSE:ENLC) headfirst. Citadel Investment Group, managed by Ken Griffin, created the largest position in EnLink Midstream LLC (NYSE:ENLC). Citadel Investment Group had $8.5 million invested in the company at the end of the quarter. Stuart J. Zimmer's Zimmer Partners also initiated a $2 million position during the quarter. The other funds with brand new ENLC positions are Israel Englander's Millennium Management, Steve Cohen's Point72 Asset Management, and Dmitry Balyasny's Balyasny Asset Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as EnLink Midstream LLC (NYSE:ENLC) but similarly valued. These stocks are Choice Hotels International, Inc. (NYSE:CHH), Eaton Vance Corp (NYSE:EV), BWX Technologies Inc (NYSE:BWXT), and Flex Ltd. (NASDAQ:FLEX). This group of stocks' market caps are closest to ENLC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CHH,19,193292,1 EV,15,97050,2 BWXT,19,105875,1 FLEX,34,993531,7 Average,21.75,347437,2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $347 million. That figure was $40 million in ENLC's case. Flex Ltd. (NASDAQ:FLEX) is the most popular stock in this table. On the other hand Eaton Vance Corp (NYSE:EV) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks EnLink Midstream LLC (NYSE:ENLC) is even less popular than EV. Hedge funds dodged a bullet by taking a bearish stance towards ENLC. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately ENLC wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ENLC investors were disappointed as the stock returned -13.3% 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 in 2019. 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.