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Were Hedge Funds Right About Endo International plc (ENDP)?

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The Insider Monkey team has completed processing the quarterly 13F filings for the March quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Endo International plc (NASDAQ:ENDP).

Is Endo International plc (NASDAQ:ENDP) the right investment to pursue these days? The best stock pickers were taking a bullish view. The number of long hedge fund positions went up by 4 recently. Endo International plc (NASDAQ:ENDP) was in 17 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 61. Our calculations also showed that ENDP isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

10 best stocks according to billionaire Larry Robbins
10 best stocks according to billionaire Larry Robbins

Larry Robbins of Glenview Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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 homepage. Now let's take a glance at the key hedge fund action surrounding Endo International plc (NASDAQ:ENDP).

Do Hedge Funds Think ENDP Is A Good Stock To Buy Now?

At the end of March, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in ENDP a year ago. With hedgies' sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Among these funds, Paulson & Co held the most valuable stake in Endo International plc (NASDAQ:ENDP), which was worth $135.8 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $130.3 million worth of shares. Contrarius Investment Management, Glenview Capital, and Millennium Management 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 Contrarius Investment Management allocated the biggest weight to Endo International plc (NASDAQ:ENDP), around 4.59% of its 13F portfolio. Paulson & Co is also relatively very bullish on the stock, dishing out 3.12 percent of its 13F equity portfolio to ENDP.

With a general bullishness amongst the heavyweights, key money managers have jumped into Endo International plc (NASDAQ:ENDP) headfirst. Rima Senvest Management, managed by Richard Mashaal, initiated the biggest position in Endo International plc (NASDAQ:ENDP). Rima Senvest Management had $3 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also initiated a $2.1 million position during the quarter. The other funds with brand new ENDP positions are Greg Eisner's Engineers Gate Manager, Paul Tudor Jones's Tudor Investment Corp, and Ken Griffin's Citadel Investment Group.

Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Endo International plc (NASDAQ:ENDP) but similarly valued. We will take a look at HeadHunter Group PLC (NASDAQ:HHR), Astec Industries, Inc. (NASDAQ:ASTE), Unisys Corporation (NYSE:UIS), Easterly Government Properties Inc (NYSE:DEA), PBF Energy Inc (NYSE:PBF), Blink Charging Co. (NASDAQ:BLNK), and HNI Corp (NYSE:HNI). This group of stocks' market caps are similar to ENDP's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HHR,7,5977,0 ASTE,12,109279,0 UIS,15,103349,-1 DEA,16,33210,6 PBF,13,85779,-5 BLNK,12,40892,1 HNI,12,44199,2 Average,12.4,60384,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $60 million. That figure was $406 million in ENDP's case. Easterly Government Properties Inc (NYSE:DEA) is the most popular stock in this table. On the other hand HeadHunter Group PLC (NASDAQ:HHR) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Endo International plc (NASDAQ:ENDP) is more popular among hedge funds. Our overall hedge fund sentiment score for ENDP is 67.4. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 28.5% in 2021 through July 23rd and still beat the market by 10.1 percentage points. Unfortunately ENDP wasn't nearly as popular as these 5 stocks and hedge funds that were betting on ENDP were disappointed as the stock returned -32.5% since the end of the first quarter (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.