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Engility Holdings Inc (EGL): Are Hedge Funds Right About This Stock?

Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Engility Holdings Inc (NYSE:EGL) from the perspective of those elite funds.

Engility Holdings Inc investors should be aware of an increase in hedge fund interest lately. EGL was in 12 hedge funds’ portfolios at the end of the third quarter of 2015. There were 9 hedge funds in our database with EGL holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Merrimack Pharmaceuticals Inc (NASDAQ:MACK), Videocon d2h Ltd – ADR (NASDAQ:VDTH), and Capstead Mortgage Corporation (NYSE:CMO) to gather more data points.

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With all of this in mind, we’re going to review the key action regarding Engility Holdings Inc (NYSE:EGL).

How have hedgies been trading Engility Holdings Inc (NYSE:EGL)?

Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, ACK Asset Management, managed by Richard S. Meisenberg, holds the biggest position in Engility Holdings Inc (NYSE:EGL). ACK Asset Management has a $9 million position in the stock, comprising 3.8% of its 13F portfolio. On ACK Asset Management’s heels is Hawk Ridge Management, led by David Brown, holding a $7 million position; the fund has 5.2% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish encompass Jim Simons’s Renaissance Technologies, Steve Cohen’s Point72 Asset Management and Israel Englander’s Millennium Management.

As industrywide interest jumped, specific money managers have jumped into Engility Holdings Inc (NYSE:EGL) headfirst. Hawk Ridge Management, managed by David Brown, established the largest position in Engility Holdings Inc (NYSE:EGL). Hawk Ridge Management had $7 million invested in the company at the end of the quarter. Chao Ku’s Nine Chapters Capital Management also initiated a $1 million position during the quarter. The following funds were also among the new EGL investors: Glenn Russell Dubin’s Highbridge Capital Management and Dmitry Balyasny’s Balyasny Asset Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Engility Holdings Inc (NYSE:EGL) but similarly valued. These stocks are Merrimack Pharmaceuticals Inc (NASDAQ:MACK), Videocon d2h Ltd – ADR (NASDAQ:VDTH), Capstead Mortgage Corporation (NYSE:CMO), and US Ecology Inc. (NASDAQ:ECOL). This group of stocks’ market caps match EGL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MACK 10 15406 -3
VDTH 19 144936 -2
CMO 7 17484 -4
ECOL 12 114802 5

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $35 million in EGL’s case. Videocon d2h Ltd – ADR (NASDAQ:VDTH) is the most popular stock in this table. On the other hand Capstead Mortgage Corporation (NYSE:CMO) is the least popular one with only 7 bullish hedge fund positions. Engility Holdings Inc (NYSE:EGL) is not the least popular stock in this group but hedge fund interest is just 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 VDTH might be a better candidate to consider a long position.

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