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Enel Americas S.A. (ENIA): Hedge Fund Sentiment Unchanged

How do we determine whether Enel Americas S.A. (NYSE:ENIA) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

Hedge fund interest in Enel Americas S.A. (NYSE:ENIA) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare ENIA to other stocks including Pearson PLC (NYSE:PSO), NVR, Inc. (NYSE:NVR), and Bausch Health Companies (NYSE:BHC) to get a better sense of its popularity.

Why do we pay any attention at all to hedge fund sentiment? 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 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma

Let’s view the new hedge fund action encompassing Enel Americas S.A. (NYSE:ENIA).

How are hedge funds trading Enel Americas S.A. (NYSE:ENIA)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, no change from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in ENIA at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

ENIA_dec2018

When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the number one position in Enel Americas S.A. (NYSE:ENIA), worth close to $28.4 million, comprising less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, led by Jim Simons, holding a $13.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other peers that hold long positions consist of Dmitry Balyasny’s Balyasny Asset Management, ZilvinasáMecelis’s Covalis Capital and John Overdeck and David Siegel’s Two Sigma Advisors.

Due to the fact that Enel Americas S.A. (NYSE:ENIA) has witnessed bearish sentiment from the smart money, we can see that there was a specific group of fund managers who were dropping their entire stakes by the end of the third quarter. Intriguingly, Bruce Kovner’s Caxton Associates LP sold off the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising close to $0.9 million in stock. Mike Vranos’s fund, Ellington, also said goodbye to its stock, about $0.2 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks similar to Enel Americas S.A. (NYSE:ENIA). These stocks are Pearson PLC (NYSE:PSO), NVR, Inc. (NYSE:NVR), Bausch Health Companies (NYSE:BHC), and Momo Inc (NASDAQ:MOMO). All of these stocks’ market caps are similar to ENIA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PSO 3 18126 -3
NVR 25 847007 4
BHC 30 1584429 7
MOMO 45 1293399 14
Average 25.75 935740 5.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.75 hedge funds with bullish positions and the average amount invested in these stocks was $936 million. That figure was $61 million in ENIA’s case. Momo Inc (NASDAQ:MOMO) is the most popular stock in this table. On the other hand Pearson PLC (NYSE:PSO) is the least popular one with only 3 bullish hedge fund positions. Enel Americas S.A. (NYSE:ENIA) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MOMO might be a better candidate to consider a long position.

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

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