Hedge Funds Are Cooling to EnerSys (ENS)

Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Is EnerSys (NYSE:ENS) a buy now? The best stock pickers are getting less bullish. The number of bullish hedge fund positions retreated by 1 recently. ENS was in 21 hedge funds’ portfolios at the end of September. There were 22 hedge funds in our database with ENS holdings at the end of the previous quarter. At the end of this article we will also compare ENS to other stocks including Masimo Corporation (NASDAQ:MASI), Janus Capital Group Inc (NYSE:JNS), and The Wendy’s Company (NASDAQ:WEN) to get a better sense of its popularity.

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What have hedge funds been doing with EnerSys (NYSE:ENS)?

Heading into the fourth quarter of 2016, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 5% drop from the previous quarter. That did follow a surge in ownership in Q2 however, when there was a greater than 50% increase in the number of hedge funds with long positions. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
ENS
According to Insider Monkey’s hedge fund database, Joel Greenblatt’s Gotham Asset Management has the largest position in EnerSys (NYSE:ENS), worth close to $14.8 million. Sitting at the No. 2 spot is Benjamin A. Smith of Laurion Capital Management, with a $9.9 million position. Other members of the smart money with similar optimism consist of John Overdeck and David Siegel’s Two Sigma Advisors, Cliff Asness’ AQR Capital Management and Jim Simons’ Renaissance Technologies.

Due to the fact that EnerSys (NYSE:ENS) has experienced a decline in interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds who sold off their full holdings by the end of the third quarter. Intriguingly, Martin Whitman’s Third Avenue Management cut the biggest position of the “upper crust” of funds watched by Insider Monkey, worth an estimated $2.1 million in call options.. Matthew Hulsizer’s fund, PEAK6 Capital Management, also said goodbye to its call options, about $1.5 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 fund by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to EnerSys (NYSE:ENS). We will take a look at Masimo Corporation (NASDAQ:MASI), Janus Capital Group Inc (NYSE:JNS), The Wendy’s Company (NASDAQ:WEN), and The Geo Group, Inc. (NYSE:GEO). This group of stocks’ market caps match ENS’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MASI 26 163915 0
JNS 20 306404 5
WEN 18 908931 -1
GEO 14 152825 1

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $383 million. That figure was $58 million in ENS’s case. Masimo Corporation (NASDAQ:MASI) is the most popular stock in this table. On the other hand The Geo Group, Inc. (NYSE:GEO) is the least popular one with only 14 bullish hedge fund positions. EnerSys (NYSE:ENS) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MASI might be a better candidate to consider a long position in.

Disclosure: None