Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.
Endurance International Group Hldgs Inc (NASDAQ:EIGI) was in 7 hedge funds’ portfolios at the end of the third quarter of 2016. EIGI investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. There were 6 hedge funds in our database with EIGI holdings at the end of the previous quarter. At the end of this article we will also compare EIGI to other stocks including Asbury Automotive Group, Inc. (NYSE:ABG), Guess?, Inc. (NYSE:GES), and Precision Drilling Corp (USA) (NYSE:PDS) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
With all of this in mind, we’re going to go over the recent action encompassing Endurance International Group Hldgs Inc (NASDAQ:EIGI).
What have hedge funds been doing with Endurance International Group Hldgs Inc (NASDAQ:EIGI)?
At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards EIGI over the last 5 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.
Of the funds tracked by Insider Monkey, Ahmet Okumus’ Okumus Fund Management has the number one position in Endurance International Group Hldgs Inc (NASDAQ:EIGI), worth close to $61.2 million, comprising 13.7% of its total 13F portfolio. Coming in second is D E Shaw, one of the biggest hedge funds in the world, which holds a $3.8 million position. Remaining members of the smart money with similar optimism comprise Frank Slattery’s Symmetry Peak Management, Ken Griffin’s Citadel Investment Group and Mike Vranos’ Ellington. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key hedge funds have jumped into Endurance International Group Hldgs Inc (NASDAQ:EIGI) headfirst. Symmetry Peak Management assembled the most outsized position in Endurance International Group Hldgs Inc (NASDAQ:EIGI). Symmetry Peak Management had $0.6 million invested in the company at the end of the quarter. Ellington also initiated a $0.2 million position during the quarter. The following funds were also among the new EIGI investors: Jim Simons’ Renaissance Technologies and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s go over hedge fund activity in other stocks similar to Endurance International Group Hldgs Inc (NASDAQ:EIGI). We will take a look at Asbury Automotive Group, Inc. (NYSE:ABG), Guess?, Inc. (NYSE:GES), Precision Drilling Corp (USA) (NYSE:PDS), and Aerojet Rocketdyne Holdings Inc (NYSE:AJRD). All of these stocks’ market caps are similar to EIGI’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was $66 million in EIGI’s case. Asbury Automotive Group, Inc. (NYSE:ABG) is the most popular stock in this table. On the other hand Precision Drilling Corp (USA) (NYSE:PDS) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Endurance International Group Hldgs Inc (NASDAQ:EIGI) is even less popular than PDS. 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.