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Here is What Hedge Funds Think About ENSCO PLC (NYSE:ESV)

ENSCO PLC (NYSE:ESV) was in 26 hedge funds’ portfolio at the end of December. ESV investors should pay attention to a decrease in support from the world’s most elite money managers in recent months. There were 31 hedge funds in our database with ESV holdings at the end of the previous quarter.

To most shareholders, hedge funds are viewed as worthless, old investment tools of years past. While there are greater than 8000 funds trading at present, we look at the upper echelon of this club, close to 450 funds. It is widely believed that this group has its hands on most of all hedge funds’ total capital, and by keeping an eye on their best picks, we have figured out a number of investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have outpaced the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).

Equally as beneficial, bullish insider trading sentiment is another way to parse down the investments you’re interested in. Obviously, there are a variety of motivations for an upper level exec to cut shares of his or her company, but just one, very simple reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this method if investors understand what to do (learn more here).

With these “truths” under our belt, it’s important to take a glance at the recent action surrounding ENSCO PLC (NYSE:ESV).

Hedge fund activity in ENSCO PLC (NYSE:ESV)

Heading into 2013, a total of 26 of the hedge funds we track were bullish in this stock, a change of -16% from the previous quarter. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings significantly.

Of the funds we track, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital had the biggest position in ENSCO PLC (NYSE:ESV), worth close to $262 million, comprising 1.3% of its total 13F portfolio. Coming in second is Greenlight Capital, managed by David Einhorn, which held a $225 million position; 0.9% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Robert Pitts’s Steadfast Capital Management, Jonathan Auerbach’s Hound Partners and Phill Gross and Robert Atchinson’s Adage Capital Management.

Since ENSCO PLC (NYSE:ESV) has faced falling interest from hedge fund managers, logic holds that there is a sect of hedge funds that decided to sell off their entire stakes last quarter. Intriguingly, Mark Rachesky’s MHR Fund Management dropped the largest position of the “upper crust” of funds we watch, worth an estimated $362 million in stock., and Robert Rodriguez and Steven Romick of First Pacific Advisors LLC was right behind this move, as the fund dropped about $313 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 5 funds last quarter.

How are insiders trading ENSCO PLC (NYSE:ESV)?

Bullish insider trading is at its handiest when the company in focus has experienced transactions within the past 180 days. Over the last half-year time frame, ENSCO PLC (NYSE:ESV) has experienced 1 unique insiders purchasing, and 4 insider sales (see the details of insider trades here).

With the results demonstrated by the aforementioned research, retail investors must always watch hedge fund and insider trading sentiment, and ENSCO PLC (NYSE:ESV) shareholders fit into this picture quite nicely.

Click here to learn more about Insider Monkey’s Hedge Fund Newsletter

Insider Monkey’s small-cap strategy returned 29.2% between September 2012 and February 2013 versus 8.7% for the S&P 500 index. Try it now by clicking the link above.

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