EnerSys (NYSE:ENS) has seen an increase in activity from the world's largest hedge funds recently.
In the eyes of most market participants, hedge funds are viewed as unimportant, outdated financial vehicles of yesteryear. While there are over 8000 funds trading today, we hone in on the masters of this group, about 450 funds. Most estimates calculate that this group oversees most of the smart money's total capital, and by watching their best equity investments, we have discovered a number of investment strategies that have historically outstripped the market. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we've started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 25 percentage points in 6.5 month (see all of our picks from August).
Just as key, optimistic insider trading sentiment is a second way to break down the financial markets. As the old adage goes: there are plenty of reasons for an executive to get rid of shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Several academic studies have demonstrated the impressive potential of this strategy if "monkeys" know what to do (learn more here).
Consequently, we're going to take a gander at the recent action regarding EnerSys (NYSE:ENS).
At the end of the fourth quarter, a total of 19 of the hedge funds we track were bullish in this stock, a change of 6% from the previous quarter. With hedge funds' capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully.
Of the funds we track, Royce & Associates, managed by Chuck Royce, holds the most valuable position in EnerSys (NYSE:ENS). Royce & Associates has a $100 million position in the stock, comprising 0.3% of its 13F portfolio. On Royce & Associates's heels is Martin Whitman of Third Avenue Management, with a $31 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Remaining hedge funds that hold long positions include David Dreman's Dreman Value Management, Cliff Asness's AQR Capital Management and Joel Greenblatt's Gotham Asset Management.
As one would reasonably expect, key hedge funds have been driving this bullishness. Third Avenue Management, managed by Martin Whitman, assembled the biggest position in EnerSys (NYSE:ENS). Third Avenue Management had 31 million invested in the company at the end of the quarter. John A. Levin's Levin Capital Strategies also initiated a $2 million position during the quarter. The other funds with brand new ENS positions are Neil Chriss's Hutchin Hill Capital, Glenn Russell Dubin's Highbridge Capital Management, and Michael Hintze's CQS Cayman LP.
Insider trading activity, especially when it's bullish, is at its handiest when the company in question has experienced transactions within the past six months. Over the last half-year time frame, EnerSys (NYSE:ENS) has experienced zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).
Let's also take a look at hedge fund and insider activity in other stocks similar to EnerSys (NYSE:ENS). These stocks are Littelfuse, Inc. (NASDAQ:LFUS), Franklin Electric Co. (NASDAQ:FELE), Woodward Inc (NASDAQ:WWD), General Cable Corporation (NYSE:BGC), and Belden Inc. (NYSE:BDC). This group of stocks are in the industrial electrical equipment industry and their market caps resemble ENS's market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Littelfuse, Inc. (NASDAQ:LFUS)||9||0||3|
|Franklin Electric Co. (NASDAQ:FELE)||7||0||5|
|Woodward Inc (NASDAQ:WWD)||8||1||4|
|General Cable Corporation (NYSE:BGC)||20||0||4|
|Belden Inc. (NYSE:BDC)||13||2||5|
With the results shown by Insider Monkey's research, retail investors should always pay attention to hedge fund and insider trading sentiment, and EnerSys (NYSE:ENS) is an important part of this process.