Hedge Funds Are Warming Up To Endo International plc (ENDP)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Endo International plc (NASDAQ:ENDP).

Endo International plc (NASDAQ:ENDP) investors should pay attention to an increase in enthusiasm from smart money lately. Our calculations also showed that ENDP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Bill Miller

Bill Miller of Miller Value Partners

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a glance at the latest hedge fund action surrounding Endo International plc (NASDAQ:ENDP).

What have hedge funds been doing with Endo International plc (NASDAQ:ENDP)?

At the end of the first quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards ENDP over the last 18 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Is ENDP A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in Endo International plc (NASDAQ:ENDP), which was worth $58 million at the end of the third quarter. On the second spot was Miller Value Partners which amassed $48.4 million worth of shares. Glenview Capital, Paulson & Co, and Slate Path Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Miller Value Partners allocated the biggest weight to Endo International plc (NASDAQ:ENDP), around 3.11% of its 13F portfolio. Paulson & Co is also relatively very bullish on the stock, setting aside 1.36 percent of its 13F equity portfolio to ENDP.

As industrywide interest jumped, some big names were breaking ground themselves. Centerbridge Partners, managed by Mark T. Gallogly, assembled the most valuable position in Endo International plc (NASDAQ:ENDP). Centerbridge Partners had $2.2 million invested in the company at the end of the quarter. Lee Ainslie’s Maverick Capital also initiated a $1.6 million position during the quarter. The other funds with brand new ENDP positions are Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management, Michael Gelband’s ExodusPoint Capital, and Jonathan Soros’s JS Capital.

Let’s check out hedge fund activity in other stocks similar to Endo International plc (NASDAQ:ENDP). We will take a look at OneSmart International Education Group Limited (NYSE:ONE), Cadence Bancorporation (NYSE:CADE), Rite Aid Corporation (NYSE:RAD), and istar Inc (NYSE:STAR). This group of stocks’ market values are similar to ENDP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ONE 7 64491 -1
CADE 29 66003 7
RAD 16 45558 6
STAR 14 111654 -1
Average 16.5 71927 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $214 million in ENDP’s case. Cadence Bancorporation (NYSE:CADE) is the most popular stock in this table. On the other hand OneSmart International Education Group Limited (NYSE:ONE) is the least popular one with only 7 bullish hedge fund positions. Endo International plc (NASDAQ:ENDP) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th but beat the market by 14.2 percentage points. Unfortunately ENDP wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ENDP were disappointed as the stock returned 4.1% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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