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Hedge Funds Are Souring On Eni SpA (E) Anymore

Is Eni SpA (NYSE:E) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds’ picks don’t beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.

Is Eni SpA (NYSE:E) ready to rally soon? Hedge funds are becoming less confident. The number of long hedge fund positions were cut by 4 recently. Our calculations also showed that E isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

E_oct2019

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s go over the new hedge fund action surrounding Eni SpA (NYSE:E).

Hedge fund activity in Eni SpA (NYSE:E)

At the end of the second quarter, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -44% from the first quarter of 2019. On the other hand, there were a total of 7 hedge funds with a bullish position in E a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

Jeffrey Talpins Element Capital

According to Insider Monkey’s hedge fund database, Fisher Asset Management, managed by Ken Fisher, holds the largest position in Eni SpA (NYSE:E). Fisher Asset Management has a $49.2 million position in the stock, comprising 0.1% of its 13F portfolio. On Fisher Asset Management’s heels is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $25 million position; 0.1% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions comprise Jeffrey Talpins’s Element Capital Management, Renaissance Technologies and Ken Griffin’s Citadel Investment Group.

Seeing as Eni SpA (NYSE:E) has faced a decline in interest from the smart money, logic holds that there lies a certain “tier” of money managers that decided to sell off their entire stakes heading into Q3. Interestingly, Steve Cohen’s Point72 Asset Management cut the biggest stake of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $6.1 million in stock. Vince Maddi and Shawn Brennan’s fund, SIR Capital Management, also cut its stock, about $4.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 4 funds heading into Q3.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Eni SpA (NYSE:E) but similarly valued. We will take a look at The Southern Company (NYSE:SO), S&P Global Inc. (NYSE:SPGI), Prudential Public Limited Company (NYSE:PUK), and Ecolab Inc. (NYSE:ECL). This group of stocks’ market caps match E’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SO 22 835876 3
SPGI 58 4351436 4
PUK 5 40016 -1
ECL 27 2047954 0
Average 28 1818821 1.5

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 $1819 million. That figure was $79 million in E’s case. S&P Global Inc. (NYSE:SPGI) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Eni SpA (NYSE:E) is even less popular than PUK. Hedge funds dodged a bullet by taking a bearish stance towards E. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately E wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); E investors were disappointed as the stock returned -4.9% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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

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