Before we spend days researching a stock idea we’d like to take a look at how hedge funds and billionaire investors recently traded that stock. S&P 500 Index ETF (SPY) lost 8.7% through October 26th. Forty percent of the S&P 500 constituents were down more than 10%. The average return of a randomly picked stock in the index is -9.5%. This means you (or a monkey throwing a dart) have less than an even chance of beating the market by randomly picking a stock. On the other hand, the top 25 most popular S&P 500 stocks among hedge funds had an average loss of 8.8%. In this article, we will take a look at what hedge funds think about Enova International Inc (NYSE:ENVA).
Is Enova International Inc (NYSE:ENVA) a safe investment right now? The smart money is turning less bullish. The number of long hedge fund positions retreated by 1 recently. Our calculations also showed that ENVA isn’t among the 30 most popular stocks among hedge funds.
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.
We’re going to go over the key hedge fund action encompassing Enova International Inc (NYSE:ENVA).
Hedge fund activity in Enova International Inc (NYSE:ENVA)
Heading into the fourth quarter of 2018, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. On the other hand, there were a total of 14 hedge funds with a bullish position in ENVA at the beginning of this year. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
The largest stake in Enova International Inc (NYSE:ENVA) was held by Renaissance Technologies, which reported holding $67.5 million worth of stock at the end of September. It was followed by Empyrean Capital Partners with a $23.7 million position. Other investors bullish on the company included Prescott Group Capital Management, Huber Capital Management, and 683 Capital Partners.
Because Enova International Inc (NYSE:ENVA) has faced a decline in interest from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedgies that decided to sell off their entire stakes heading into Q3. It’s worth mentioning that Chuck Royce’s Royce & Associates sold off the biggest position of the 700 funds monitored by Insider Monkey, comprising an estimated $7.8 million in stock. David Brown’s fund, Hawk Ridge Management, also sold off its stock, about $2.5 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest was cut by 1 funds heading into Q3.
Let’s now take a look at hedge fund activity in other stocks similar to Enova International Inc (NYSE:ENVA). We will take a look at Kforce Inc. (NASDAQ:KFRC), IRSA Inversiones y Representaciones Sociedad Anónima (NYSE:IRS), TPI Composites, Inc. (NASDAQ:TPIC), and Associated Capital Group, Inc. (NYSE:AC). All of these stocks’ market caps are similar to ENVA’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KFRC | 20 | 78246 | 4 |
| IRS | 10 | 57298 | -2 |
| TPIC | 17 | 90246 | 1 |
| AC | 4 | 73364 | 0 |
| Average | 12.75 | 74789 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $188 million in ENVA’s case. Kforce Inc. (NASDAQ:KFRC) is the most popular stock in this table. On the other hand Associated Capital Group, Inc. (NYSE:AC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Enova International Inc (NYSE:ENVA) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
