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Hedge Funds Aren’t Crazy About Enphase Energy Inc (ENPH) Anymore

It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Enphase Energy Inc (NASDAQ:ENPH) during the quarter below.

Most solar stocks took a hit this year and Enphase Energy Inc (NASDAQ:ENPH) is no exception with the stock trading 85% in the red year-to-date. In turn, this led to a decrease of the stock’s popularity among the funds we track. Enphase was in 10 hedge funds’ portfolios at the end of the third quarter of 2015, compared to 14 funds with long positions a quarter earlier. At the end of this article we will also compare ENPH to other stocks, including Bill Barrett Corporation (NYSE:BBG), Inc (NYSE:CRCM), and Cumulus Media Inc (NASDAQ:CMLS) to get a better sense of its popularity.

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In the 21st century investor’s toolkit there are numerous metrics stock traders put to use to assess stocks. Two of the less utilized metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the best investment managers can trounce the broader indices by a solid margin (see the details here).

Now, let’s review the new action encompassing Enphase Energy Inc (NASDAQ:ENPH).

What does the smart money think about Enphase Energy Inc (NASDAQ:ENPH)?

At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -29% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Dan Loeb’s Third Point has the most valuable position in Enphase Energy Inc (NASDAQ:ENPH), worth close to $23.1 million, accounting for 0.2% of its total 13F portfolio. Coming in second is Park West Asset Management, managed by Peter S. Park, which holds a $8.1 million position; 0.7% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish encompass Chuck Royce’s Royce & Associates, Paul Tudor Jones’ Tudor Investment Corp and Brad Farber’s Atika Capital.

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