Coronavirus is probably the #1 concern in investors' minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. After several tireless days we have finished crunching the numbers from nearly 835 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of December 31st. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Energizer Holdings, Inc. (NYSE:ENR).
Energizer Holdings, Inc. (NYSE:ENR) was in 22 hedge funds' portfolios at the end of December. ENR has experienced an increase in activity from the world's largest hedge funds of late. There were 19 hedge funds in our database with ENR holdings at the end of the previous quarter. Our calculations also showed that ENR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 41 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_25251" align="aligncenter" width="400"] George Soros of Soros Fund Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. With all of this in mind we're going to check out the new hedge fund action regarding Energizer Holdings, Inc. (NYSE:ENR).
Hedge fund activity in Energizer Holdings, Inc. (NYSE:ENR)
At the end of the fourth quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from the previous quarter. By comparison, 21 hedge funds held shares or bullish call options in ENR a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, GAMCO Investors, managed by Mario Gabelli, holds the biggest position in Energizer Holdings, Inc. (NYSE:ENR). GAMCO Investors has a $93.3 million position in the stock, comprising 0.7% of its 13F portfolio. Sitting at the No. 2 spot is George Soros of Soros Fund Management, with a $35.4 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions encompass Ken Griffin's Citadel Investment Group, Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors and Frederick DiSanto's Ancora Advisors. In terms of the portfolio weights assigned to each position Soros Fund Management allocated the biggest weight to Energizer Holdings, Inc. (NYSE:ENR), around 1.15% of its 13F portfolio. Aequim Alternative Investments is also relatively very bullish on the stock, earmarking 0.97 percent of its 13F equity portfolio to ENR.
Now, key hedge funds were leading the bulls' herd. Renaissance Technologies, assembled the largest position in Energizer Holdings, Inc. (NYSE:ENR). Renaissance Technologies had $3.8 million invested in the company at the end of the quarter. Donald Sussman's Paloma Partners also made a $2.7 million investment in the stock during the quarter. The other funds with brand new ENR positions are Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, Qing Li's Sciencast Management, and D. E. Shaw's D E Shaw.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Energizer Holdings, Inc. (NYSE:ENR) but similarly valued. We will take a look at Corelogic Inc (NYSE:CLGX), BankUnited (NYSE:BKU), AVX Corporation (NYSE:AVX), and TopBuild Corp (NYSE:BLD). This group of stocks' market valuations resemble ENR's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CLGX,28,383328,-3 BKU,25,356297,1 AVX,14,102611,1 BLD,29,177380,8 Average,24,254904,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $255 million. That figure was $193 million in ENR's case. TopBuild Corp (NYSE:BLD) is the most popular stock in this table. On the other hand AVX Corporation (NYSE:AVX) is the least popular one with only 14 bullish hedge fund positions. Energizer Holdings, Inc. (NYSE:ENR) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but beat the market by 5.5 percentage points. Unfortunately ENR wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ENR investors were disappointed as the stock returned -29.1% during the same time period 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 among hedge funds as most of these stocks already outperformed the market in Q1. 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.