In this article we will check out the progression of hedge fund sentiment towards Enable Midstream Partners LP (NYSE:ENBL) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Enable Midstream Partners LP (NYSE:ENBL) investors should be aware of an increase in support from the world’s most elite money managers of late. Our calculations also showed that ENBL 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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. Now we’re going to take a gander at the recent hedge fund action encompassing Enable Midstream Partners LP (NYSE:ENBL).
What does smart money think about Enable Midstream Partners LP (NYSE:ENBL)?
At the end of the first quarter, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. By comparison, 5 hedge funds held shares or bullish call options in ENBL a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the largest position in Enable Midstream Partners LP (NYSE:ENBL). Arrowstreet Capital has a $5.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Zilvinas Mecelis of Covalis Capital, with a $0.9 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other professional money managers that are bullish contain Ken Griffin’s Citadel Investment Group, and Matthew Hulsizer’s PEAK6 Capital Management. In terms of the portfolio weights assigned to each position Covalis Capital allocated the biggest weight to Enable Midstream Partners LP (NYSE:ENBL), around 0.44% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to ENBL.
As aggregate interest increased, specific money managers were breaking ground themselves. Covalis Capital, managed by Zilvinas Mecelis, established the biggest position in Enable Midstream Partners LP (NYSE:ENBL). Covalis Capital had $0.9 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made a $0 million investment in the stock during the quarter. The only other fund with a brand new ENBL position is Emanuel J. Friedman’s EJF Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Enable Midstream Partners LP (NYSE:ENBL) but similarly valued. We will take a look at Texas Capital Bancshares Inc (NASDAQ:TCBI), Scorpio Tankers Inc. (NYSE:STNG), Flagstar Bancorp Inc (NYSE:FBC), and Covanta Holding Corporation (NYSE:CVA). This group of stocks’ market values are closest to ENBL’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $66 million. That figure was $7 million in ENBL’s case. Scorpio Tankers Inc. (NYSE:STNG) is the most popular stock in this table. On the other hand Flagstar Bancorp Inc (NYSE:FBC) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Enable Midstream Partners LP (NYSE:ENBL) is even less popular than FBC. Hedge funds clearly dropped the ball on ENBL as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on ENBL as the stock returned 147.6% so far in the second quarter and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.