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Did Hedge Funds Drop The Ball On Enphase Energy Inc (ENPH) ?

Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and investors’ positions as of the end of the fourth quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of Enphase Energy Inc (NASDAQ:ENPH) based on that data.

Is Enphase Energy Inc (NASDAQ:ENPH) worth your attention right now? Investors who are in the know are getting less optimistic. The number of bullish hedge fund bets shrunk by 1 recently. Our calculations also showed that ENPH isn’t among the 30 most popular stocks among hedge funds. ENPH was in 18 hedge funds’ portfolios at the end of December. There were 19 hedge funds in our database with ENPH positions at the end of the previous quarter.

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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Jonathan Barrett Luminus Management

We’re going to review the latest hedge fund action surrounding Enphase Energy Inc (NASDAQ:ENPH).

Hedge fund activity in Enphase Energy Inc (NASDAQ:ENPH)

At the end of the fourth quarter, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards ENPH over the last 14 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

ENPH_may2019

More specifically, Electron Capital Partners was the largest shareholder of Enphase Energy Inc (NASDAQ:ENPH), with a stake worth $23.4 million reported as of the end of December. Trailing Electron Capital Partners was Park West Asset Management, which amassed a stake valued at $21.2 million. Tenzing Global Investors, Greenvale Capital, and Bloom Tree Partners were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that Enphase Energy Inc (NASDAQ:ENPH) has faced bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few hedge funds that elected to cut their full holdings heading into Q3. It’s worth mentioning that Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital sold off the biggest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $0.2 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also dropped its stock, about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 1 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks similar to Enphase Energy Inc (NASDAQ:ENPH). We will take a look at Capitol Investment Corp. IV (NYSE:CIC), QCR Holdings, Inc. (NASDAQ:QCRH), Gilat Satellite Networks Ltd. (NASDAQ:GILT), and MarineMax, Inc. (NYSE:HZO). This group of stocks’ market caps match ENPH’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CIC 14 162175 -1
QCRH 9 54385 1
GILT 2 26919 0
HZO 17 48056 4
Average 10.5 72884 1

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $93 million in ENPH’s case. MarineMax, Inc. (NYSE:HZO) is the most popular stock in this table. On the other hand Gilat Satellite Networks Ltd. (NASDAQ:GILT) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Enphase Energy Inc (NASDAQ:ENPH) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on ENPH as the stock returned 96.2% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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