Hedge Funds Are Dumping Essent Group Ltd (ESNT)

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Essent Group Ltd (NYSE:ESNT) in this article.

Essent Group Ltd (NYSE:ESNT) investors should be aware of a decrease in enthusiasm from smart money of late. Essent Group Ltd (NYSE:ESNT) was in 24 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 36. There were 32 hedge funds in our database with ESNT positions at the end of the fourth quarter. Our calculations also showed that ESNT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to analyze the new hedge fund action surrounding Essent Group Ltd (NYSE:ESNT).

Do Hedge Funds Think ESNT Is A Good Stock To Buy Now?

At first quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in ESNT a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Essent Group Ltd (NYSE:ESNT) was held by Rima Senvest Management, which reported holding $131.3 million worth of stock at the end of December. It was followed by Polar Capital with a $114.6 million position. Other investors bullish on the company included Echo Street Capital Management, Interval Partners, and Holocene Advisors. In terms of the portfolio weights assigned to each position Rima Senvest Management allocated the biggest weight to Essent Group Ltd (NYSE:ESNT), around 4.13% of its 13F portfolio. Beach Point Capital Management is also relatively very bullish on the stock, dishing out 1.4 percent of its 13F equity portfolio to ESNT.

Seeing as Essent Group Ltd (NYSE:ESNT) has faced declining sentiment from hedge fund managers, logic holds that there is a sect of hedgies that elected to cut their entire stakes last quarter. It’s worth mentioning that Mark Coe’s Intrinsic Edge Capital said goodbye to the biggest position of all the hedgies monitored by Insider Monkey, totaling about $8.4 million in stock. Renaissance Technologies, also sold off its stock, about $4.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 8 funds last quarter.

Let’s check out hedge fund activity in other stocks similar to Essent Group Ltd (NYSE:ESNT). We will take a look at 1Life Healthcare, Inc. (NASDAQ:ONEM), Stag Industrial Inc (NYSE:STAG), Cousins Properties Incorporated (NYSE:CUZ), Schrodinger, Inc. (NASDAQ:SDGR), ACV Auctions Inc. (NASDAQ:ACVA), Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR), and NOV Inc. (NYSE:NOV). All of these stocks’ market caps are similar to ESNT’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.3 hedge funds with bullish positions and the average amount invested in these stocks was $433 million. That figure was $333 million in ESNT’s case. 1Life Healthcare, Inc. (NASDAQ:ONEM) is the most popular stock in this table. On the other hand Grupo Aeroportuario del Sureste, S. A. B. de C. V. (NYSE:ASR) is the least popular one with only 8 bullish hedge fund positions. Essent Group Ltd (NYSE:ESNT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ESNT is 53.4. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately ESNT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on ESNT were disappointed as the stock returned -7.2% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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