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Did Hedge Funds Make The Right Call On Energizer Holdings, Inc. (ENR) ?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Energizer Holdings, Inc. (NYSE:ENR) and determine whether the smart money was really smart about this stock.

Is Energizer Holdings, Inc. (NYSE:ENR) a buy right now? Hedge funds were taking a bearish view. The number of bullish hedge fund bets decreased by 1 recently. Our calculations also showed that ENR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). ENR was in 21 hedge funds’ portfolios at the end of March. There were 22 hedge funds in our database with ENR positions at the end of the previous quarter.

Video: Watch our video about the top 5 most popular hedge fund stocks.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.

Ken Griffin

Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Cannabis stocks are roaring back in 2020, so we are checking out this under-the-radar stock. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind we’re going to go over the recent hedge fund action encompassing Energizer Holdings, Inc. (NYSE:ENR).

What does smart money think about Energizer Holdings, Inc. (NYSE:ENR)?

At the end of the first quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards ENR over the last 18 quarters. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).

Is ENR A Good Stock To Buy?

Among these funds, GAMCO Investors held the most valuable stake in Energizer Holdings, Inc. (NYSE:ENR), which was worth $58 million at the end of the third quarter. On the second spot was Armistice Capital which amassed $26.4 million worth of shares. Highbridge Capital Management, Citadel Investment Group, and Ancora Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Armistice Capital allocated the biggest weight to Energizer Holdings, Inc. (NYSE:ENR), around 1.63% of its 13F portfolio. Highbridge Capital Management is also relatively very bullish on the stock, dishing out 0.77 percent of its 13F equity portfolio to ENR.

Judging by the fact that Energizer Holdings, Inc. (NYSE:ENR) has witnessed declining sentiment from the aggregate hedge fund industry, it’s easy to see that there lies a certain “tier” of money managers that slashed their full holdings heading into Q4. Intriguingly, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors dumped the biggest position of all the hedgies tracked by Insider Monkey, totaling about $9.6 million in stock. Israel Englander’s fund, Millennium Management, also sold off its stock, about $5.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest fell by 1 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Energizer Holdings, Inc. (NYSE:ENR) but similarly valued. We will take a look at EnerSys (NYSE:ENS), Arena Pharmaceuticals, Inc. (NASDAQ:ARNA), Uniqure NV (NASDAQ:QURE), and BEST Inc. (NYSE:BEST). All of these stocks’ market caps match ENR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ENS 16 81264 3
ARNA 36 362670 3
QURE 44 642438 0
BEST 6 10173 -4
Average 25.5 274136 0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.5 hedge funds with bullish positions and the average amount invested in these stocks was $274 million. That figure was $120 million in ENR’s case. Uniqure NV (NASDAQ:QURE) is the most popular stock in this table. On the other hand BEST Inc. (NYSE:BEST) is the least popular one with only 6 bullish hedge fund positions. Energizer Holdings, Inc. (NYSE:ENR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 18.6% in 2020 through July 27th and still beat the market by 17.1 percentage points. A small number of hedge funds were also right about betting on ENR as the stock returned 63.5% since the end of March and outperformed the market by an even larger margin.

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