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Did Hedge Funds Drop The Ball On Entegris Inc (ENTG)?

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of December. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Entegris Inc (NASDAQ:ENTG), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Entegris Inc (NASDAQ:ENTG) a superb stock to buy now? Prominent investors are turning less bullish. The number of bullish hedge fund positions fell by 7 in recent months. Our calculations also showed that ENTG isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Roger Ibbotson Zebra Capital

Let’s analyze the fresh hedge fund action regarding Entegris Inc (NASDAQ:ENTG).

How are hedge funds trading Entegris Inc (NASDAQ:ENTG)?

At the end of the fourth quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -28% from the previous quarter. On the other hand, there were a total of 28 hedge funds with a bullish position in ENTG a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

ENTG_apr2019

The largest stake in Entegris Inc (NASDAQ:ENTG) was held by GMT Capital, which reported holding $225.2 million worth of stock at the end of September. It was followed by RGM Capital with a $52.3 million position. Other investors bullish on the company included Renaissance Technologies, Daruma Asset Management, and D E Shaw.

Because Entegris Inc (NASDAQ:ENTG) has witnessed bearish sentiment from hedge fund managers, we can see that there were a few money managers who sold off their full holdings last quarter. At the top of the heap, Scott Phillips’s Latimer Light Capital cut the largest position of the 700 funds monitored by Insider Monkey, valued at about $19.3 million in stock, and Ian Simm’s Impax Asset Management was right behind this move, as the fund sold off about $4.3 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 7 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Entegris Inc (NASDAQ:ENTG). We will take a look at Landstar System, Inc. (NASDAQ:LSTR), FibroGen Inc (NASDAQ:FGEN), Hospitality Properties Trust (NASDAQ:HPT), and ALLETE Inc (NYSE:ALE). This group of stocks’ market values are similar to ENTG’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LSTR 23 202014 -5
FGEN 20 221726 3
HPT 16 70399 0
ALE 18 207421 1
Average 19.25 175390 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $423 million in ENTG’s case. Landstar System, Inc. (NASDAQ:LSTR) is the most popular stock in this table. On the other hand Hospitality Properties Trust (NASDAQ:HPT) is the least popular one with only 16 bullish hedge fund positions. Entegris Inc (NASDAQ:ENTG) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on ENTG as the stock returned 46.2% and outperformed the market by an even larger margin.

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

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