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Do Hedge Funds Love Entergy Corporation (ETR)?

The worries about the economic slowdown in China and the ongoing uncertainty about the path of interest-rate increases triggered several waves of equity sell-offs during the third quarter. Of course, most hedge funds and other asset managers had to stomach substantial losses during the bloody three-month period, which might have caused some to consider fleeing the U.S. equity markets. Interestingly, smaller-cap stocks registered higher losses than large-capitalization stocks during the September quarter, suggesting that institutional investors heavily discarded seemingly riskier equities amid high uncertainty and turmoil. In fact, the Russell 2000 Index lost 11.9% in the third quarter, while the Standard and Poor’s 500 benchmark declined a mere 6.4%. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Entergy Corporation (NYSE:ETR).

Entergy Corporation (NYSE:ETR) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. At the end of this article we will also compare ETR to other stocks including Noble Energy, Inc. (NYSE:NBL), Hanesbrands Inc. (NYSE:HBI), and The Gap Inc. (NYSE:GPS) to get a better sense of its popularity.

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In the financial world there are dozens of signals market participants can use to assess their stock investments. A pair of the less known signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outclass the market by a healthy margin (see the details here).

Keeping this in mind, let’s view the fresh action regarding Entergy Corporation (NYSE:ETR).

What have hedge funds been doing with Entergy Corporation (NYSE:ETR)?

Heading into Q4, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 53% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the number one position in Entergy Corporation (NYSE:ETR). Renaissance Technologies has a $160.7 million position in the stock, comprising 0.4% of its 13F portfolio. The second largest stake is held by Adage Capital Management, managed by Phill Gross and Robert Atchinson, which holds a $99.3 million position; 0.3% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish consist of Cliff Asness’ AQR Capital Management, Jonathan Barrett and Paul Segal’s Luminus Management and Israel Englander’s Millennium Management.

As aggregate interest increased, some big names were breaking ground themselves. Luminus Management, managed by Jonathan Barrett and Paul Segal, assembled the biggest position in Entergy Corporation (NYSE:ETR). Luminus Management had $65.9 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $54 million position during the quarter. The other funds with brand new ETR positions are Jos Shaver’s Electron Capital Partners, Peter Muller’s PDT Partners, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital.

Let’s check out hedge fund activity in other stocks similar to Entergy Corporation (NYSE:ETR). We will take a look at Noble Energy, Inc. (NYSE:NBL), Hanesbrands Inc. (NYSE:HBI), The Gap Inc. (NYSE:GPS), and Liberty Media Corp (NASDAQ:LMCK). This group of stocks’ market valuations resemble ETR’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NBL 44 1897931 7
HBI 32 1072465 -2
GPS 34 773243 13
LMCK 39 1943732 7

As you can see these stocks had an average of 37.25 hedge funds with bullish positions and the average amount invested in these stocks was $1422 million. That figure was $684 million in ETR’s case. Noble Energy, Inc. (NYSE:NBL) is the most popular stock in this table. On the other hand Hanesbrands Inc. (NYSE:HBI) is the least popular one with only 32 bullish hedge fund positions. Compared to these stocks Entergy Corporation (NYSE:ETR) is even less popular than HBI. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.

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