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 Enterprise Financial Services Corp (NASDAQ:EFSC).
Enterprise Financial Services Corp (NASDAQ:EFSC) investors should be aware of a decrease in hedge fund sentiment of late. EFSC was in 8 hedge funds’ portfolios at the end of the first quarter of 2020. There were 14 hedge funds in our database with EFSC holdings at the end of the previous quarter. Our calculations also showed that EFSC 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.
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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to analyze the fresh hedge fund action encompassing Enterprise Financial Services Corp (NASDAQ:EFSC).
What does smart money think about Enterprise Financial Services Corp (NASDAQ:EFSC)?
At the end of the first quarter, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -43% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in EFSC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the number one position in Enterprise Financial Services Corp (NASDAQ:EFSC), worth close to $13.7 million, amounting to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Elizabeth Park Capital Management, managed by Fred Cummings, which holds a $3.9 million position; the fund has 2.9% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish encompass Brian Ashford-Russell and Tim Woolley’s Polar Capital, Ken Griffin’s Citadel Investment Group and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Elizabeth Park Capital Management allocated the biggest weight to Enterprise Financial Services Corp (NASDAQ:EFSC), around 2.92% of its 13F portfolio. Polar Capital is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to EFSC.
Judging by the fact that Enterprise Financial Services Corp (NASDAQ:EFSC) has experienced a decline in interest from the smart money, it’s easy to see that there is a sect of money managers who were dropping their entire stakes heading into Q4. It’s worth mentioning that Cliff Asness’s AQR Capital Management said goodbye to the largest position of all the hedgies monitored by Insider Monkey, valued at an estimated $1.6 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $0.5 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 6 funds heading into Q4.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Enterprise Financial Services Corp (NASDAQ:EFSC) but similarly valued. We will take a look at Model N Inc (NYSE:MODN), Sangamo Therapeutics, Inc. (NASDAQ:SGMO), Cincinnati Bell Inc. (NYSE:CBB), and Stoke Therapeutics, Inc. (NASDAQ:STOK). All of these stocks’ market caps are closest to EFSC’s market cap.
|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 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $25 million in EFSC’s case. Sangamo Therapeutics, Inc. (NASDAQ:SGMO) is the most popular stock in this table. On the other hand Stoke Therapeutics, Inc. (NASDAQ:STOK) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Enterprise Financial Services Corp (NASDAQ:EFSC) is even less popular than STOK. Hedge funds dodged a bullet by taking a bearish stance towards EFSC. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th but managed to beat the market by 14.8 percentage points. Unfortunately EFSC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); EFSC investors were disappointed as the stock returned 11.2% during the second quarter (through June 17th) 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 most of these stocks already outperformed the market so far in 2020.
Disclosure: None. This article was originally published at Insider Monkey.