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Did Hedge Funds Make The Right Call On Entegris Inc (ENTG) ?

At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Entegris Inc (NASDAQ:ENTG) at the end of the first quarter and determine whether the smart money was really smart about this stock.

Entegris Inc (NASDAQ:ENTG) was in 19 hedge funds’ portfolios at the end of the first quarter of 2020. ENTG shareholders have witnessed a decrease in enthusiasm from smart money in recent months. There were 24 hedge funds in our database with ENTG positions at the end of the previous quarter. Our calculations also showed that ENTG 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).

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

To most traders, hedge funds are assumed to be worthless, old financial tools of yesteryear. While there are more than 8000 funds in operation at the moment, Our researchers choose to focus on the leaders of this group, around 850 funds. These money managers shepherd the majority of the hedge fund industry’s total capital, and by following their first-class equity investments, Insider Monkey has unsheathed a few investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Robert Moses RGM Capital

Robert G. Moses of RGM Capital

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. Keeping this in mind we’re going to take a look at the new hedge fund action surrounding Entegris Inc (NASDAQ:ENTG).

What have hedge funds been doing with Entegris Inc (NASDAQ:ENTG)?

At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -21% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards ENTG over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, GMT Capital was the largest shareholder of Entegris Inc (NASDAQ:ENTG), with a stake worth $177.7 million reported as of the end of September. Trailing GMT Capital was Cantillon Capital Management, which amassed a stake valued at $118.3 million. Iridian Asset Management, RGM Capital, and Royce & Associates 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 GMT Capital allocated the biggest weight to Entegris Inc (NASDAQ:ENTG), around 9.98% of its 13F portfolio. RGM Capital is also relatively very bullish on the stock, designating 3.31 percent of its 13F equity portfolio to ENTG.

Since Entegris Inc (NASDAQ:ENTG) has faced a decline in interest from hedge fund managers, we can see that there lies a certain “tier” of hedgies who sold off their full holdings by the end of the first quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital sold off the biggest position of the 750 funds watched by Insider Monkey, comprising about $50.7 million in stock, and Brian Ashford-Russell and Tim Woolley’s Polar Capital was right behind this move, as the fund dropped about $28.5 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 5 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks similar to Entegris Inc (NASDAQ:ENTG). We will take a look at Omega Healthcare Investors Inc (NYSE:OHI), 10x Genomics, Inc. (NASDAQ:TXG), PulteGroup, Inc. (NYSE:PHM), and GCI Liberty, Inc. (NASDAQ:GLIBA). This group of stocks’ market caps resemble ENTG’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OHI 17 152576 -1
TXG 20 166530 8
PHM 36 465706 2
GLIBA 49 1833581 2
Average 30.5 654598 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $655 million. That figure was $488 million in ENTG’s case. GCI Liberty, Inc. (NASDAQ:GLIBA) is the most popular stock in this table. On the other hand Omega Healthcare Investors Inc (NYSE:OHI) is the least popular one with only 17 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 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 ENTG as the stock returned 55.6% 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.