Enbridge Inc (USA) (NYSE:ENB) investors should pay attention to a decrease in hedge fund interest recently.
To most market participants, hedge funds are seen as underperforming, old investment vehicles of yesteryear. While there are greater than 8000 funds in operation at present, we at Insider Monkey hone in on the crème de la crème of this group, around 450 funds. It is widely believed that this group oversees most of the smart money’s total capital, and by tracking their best equity investments, we have spotted a number of investment strategies that have historically outperformed the market. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per annum for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outclassed the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as integral, positive insider trading sentiment is a second way to parse down the world of equities. There are plenty of incentives for a corporate insider to get rid of shares of his or her company, but only one, very obvious reason why they would behave bullishly. Plenty of academic studies have demonstrated the market-beating potential of this tactic if you know where to look (learn more here).
Consequently, it’s important to take a gander at the key action encompassing Enbridge Inc (USA) (NYSE:ENB).
How have hedgies been trading Enbridge Inc (USA) (NYSE:ENB)?
In preparation for this year, a total of 8 of the hedge funds we track held long positions in this stock, a change of -20% from the third quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially.
When looking at the hedgies we track, Phill Gross and Robert Atchinson’s Adage Capital Management had the largest position in Enbridge Inc (USA) (NYSE:ENB), worth close to $65 million, comprising 0.2% of its total 13F portfolio. On Adage Capital Management’s heels is Tetrem Capital Management, managed by Daniel Bubis, which held a $39 million position; 1.2% of its 13F portfolio is allocated to the stock. Some other hedgies that hold long positions include Christopher C. Grisanti’s Grisanti Brown & Partners, Jim Simons’s Renaissance Technologies and Ray Dalio’s Bridgewater Associates.
Due to the fact that Enbridge Inc (USA) (NYSE:ENB) has faced falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of fund managers that decided to sell off their positions entirely in Q4. Interestingly, Robert B. Gillam’s McKinley Capital Management cut the largest position of the 450+ funds we track, worth an estimated $57 million in stock., and Ken Gray and Steve Walsh of Bryn Mawr Capital was right behind this move, as the fund dumped about $5 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds in Q4.
How have insiders been trading Enbridge Inc (USA) (NYSE:ENB)?
Bullish insider trading is most useful when the company in question has seen transactions within the past half-year. Over the latest half-year time frame, Enbridge Inc (USA) (NYSE:ENB) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Enbridge Inc (USA) (NYSE:ENB). These stocks are Plains All American Pipeline, L.P. (NYSE:PAA), Spectra Energy Corp. (NYSE:SE), Williams Companies, Inc. (NYSE:WMB), Kinder Morgan Energy Partners LP (NYSE:KMP), and Kinder Morgan Inc (NYSE:KMI). All of these stocks are in the oil & gas pipelines industry and their market caps are closest to ENB’s market cap.