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Entergy Corporation (ETR): Hedge Funds Taking Some Chips Off The Table

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Entergy Corporation (NYSE:ETR) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

Entergy Corporation (NYSE:ETR) has experienced a decrease in hedge fund sentiment of late. Entergy Corporation (NYSE:ETR) was in 32 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 34. Our calculations also showed that ETR isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Charles Davidson - Wexford Capital

Charles Davidson of Wexford Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Now we’re going to analyze the key hedge fund action encompassing Entergy Corporation (NYSE:ETR).

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

At second quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the first quarter of 2020. By comparison, 30 hedge funds held shares or bullish call options in ETR a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of Entergy Corporation (NYSE:ETR), with a stake worth $352.8 million reported as of the end of September. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $179.9 million. Millennium Management, D E Shaw, and Pzena Investment Management 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 Brasada Capital Management allocated the biggest weight to Entergy Corporation (NYSE:ETR), around 1.4% of its 13F portfolio. Huber Capital Management is also relatively very bullish on the stock, earmarking 1.38 percent of its 13F equity portfolio to ETR.

Due to the fact that Entergy Corporation (NYSE:ETR) has witnessed a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few money managers who were dropping their full holdings in the second quarter. It’s worth mentioning that Clint Carlson’s Carlson Capital dropped the largest investment of the 750 funds monitored by Insider Monkey, valued at about $18 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund dumped about $4.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 2 funds in the second quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Entergy Corporation (NYSE:ETR) but similarly valued. These stocks are The Trade Desk, Inc. (NASDAQ:TTD), Wayfair Inc (NYSE:W), Garmin Ltd. (NASDAQ:GRMN), Coupa Software Incorporated (NASDAQ:COUP), The Royal Bank of Scotland Group plc (NYSE:RBS), Arthur J. Gallagher & Co. (NYSE:AJG), and Ameriprise Financial, Inc. (NYSE:AMP). This group of stocks’ market caps are similar to ETR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TTD 20 513971 -5
W 41 3533920 7
GRMN 23 398083 -4
COUP 50 3002984 -16
RBS 5 5012 0
AJG 29 234663 1
AMP 28 707002 2
Average 28 1199376 -2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $1199 million. That figure was $953 million in ETR’s case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand Royal Bank of Scotland Group plc (NYSE:RBS) is the least popular one with only 5 bullish hedge fund positions. Entergy Corporation (NYSE:ETR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ETR is 61.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2020 through September 14th and beat the market by 17.6 percentage points. Unfortunately ETR wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ETR were disappointed as the stock returned 4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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