Hedge Funds Are Dumping Enterprise Financial Services Corp (EFSC)

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Enterprise Financial Services Corp (NASDAQ:EFSC).

Is Enterprise Financial Services Corp (NASDAQ:EFSC) a buy right now? Money managers are altogether actually turning less bullish. The number of long hedge fund bets were cut by 1 lately. EFSC was in 13 hedge funds’ portfolios at the end of September. There were 14 hedge funds in our database with EFSC holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Atento SA (NYSE:ATTO), Global Brass and Copper Holdings Inc (NYSE:BRSS), and Agenus Inc (NASDAQ:AGEN) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How are hedge funds trading Enterprise Financial Services Corp (NASDAQ:EFSC)?

At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 7% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EFSC over the last 5 quarters. So, let’s see 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, Chuck Royce’s Royce & Associates holds the largest position in Enterprise Financial Services Corp (NASDAQ:EFSC) which has a $7.5 million position in the stock. The second largest stake is held by Renaissance Technologies, one of the largest hedge funds in the world, with a $7.3 million position. Other hedge funds and institutional investors with similar optimism include Paul Hondros’s AlphaOne Capital Partners, Cliff Asness’ AQR Capital Management and Israel Englander’s Millennium Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Since Enterprise Financial Services Corp (NASDAQ:EFSC) has faced declining sentiment from the smart money, it’s safe to say that there exists a select few hedge funds who were dropping their entire stakes in the third quarter. Intriguingly, Glenn Russell Dubin’s Highbridge Capital Management dropped the biggest position of all the hedgies tracked by Insider Monkey, valued at about $0.4 million in stock. Robert B. Gillam’s fund, McKinley Capital Management, also dropped its stock.

Let’s also examine hedge fund activity in other stocks similar to Enterprise Financial Services Corp (NASDAQ:EFSC). We will take a look at Atento SA (NYSE:ATTO), Global Brass and Copper Holdings Inc (NYSE:BRSS), Agenus Inc (NASDAQ:AGEN), and Lakeland Bancorp, Inc. (NASDAQ:LBAI). This group of stocks’ market values are similar to EFSC’s market value.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $47 million. That figure was $31 million in EFSC’s case. Global Brass and Copper Holdings Inc (NYSE:BRSS) is the most popular stock in this table. On the other hand Atento SA (NYSE:ATTO) is the least popular one with only 5 bullish hedge fund positions. Enterprise Financial Services Corp (NASDAQ:EFSC) 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. In this regard BRSS might be a better candidate to consider taking a long position in.

Disclosure: None