Here’s What Hedge Funds Think About Endo International plc (ENDP)

It was a rough fourth 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 4.8% during 2018 and average hedge fund losing about 1%. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by more than 6 percentage points, as investors fled less-known quantities for safe havens. Luckily hedge funds were shifting their holdings into large-cap stocks. The 20 most popular hedge fund stocks actually generated an average return of 18.7% so far in 2019 and outperformed the S&P 500 ETF by 6.6 percentage points. We are done processing the latest 13f filings and in this article we will study how hedge fund sentiment towards Endo International plc (NASDAQ:ENDP) changed during the first quarter.

Is Endo International plc (NASDAQ:ENDP) worth your attention right now? The best stock pickers are in a bearish mood. The number of long hedge fund positions shrunk by 4 in recent months. Our calculations also showed that endp isn’t among the 30 most popular stocks among hedge funds. ENDP was in 19 hedge funds’ portfolios at the end of the first quarter of 2019. There were 23 hedge funds in our database with ENDP holdings at the end of the previous quarter.

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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Samuel Isaly Orbimed Advisors

We’re going to review the fresh hedge fund action regarding Endo International plc (NASDAQ:ENDP).

What does the smart money think about Endo International plc (NASDAQ:ENDP)?

At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -17% from the previous quarter. By comparison, 24 hedge funds held shares or bullish call options in ENDP a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with ENDP Positions

Of the funds tracked by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the largest position in Endo International plc (NASDAQ:ENDP). Renaissance Technologies has a $86.3 million position in the stock, comprising 0.1% of its 13F portfolio. On Renaissance Technologies’s heels is Glenview Capital, led by Larry Robbins, holding a $69.6 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism consist of John Paulson’s Paulson & Co, Samuel Isaly’s OrbiMed Advisors and Cliff Asness’s AQR Capital Management.

Judging by the fact that Endo International plc (NASDAQ:ENDP) has witnessed bearish sentiment from the smart money, logic holds that there exists a select few hedgies who sold off their positions entirely last quarter. At the top of the heap, Israel Englander’s Millennium Management said goodbye to the largest investment of the “upper crust” of funds tracked by Insider Monkey, valued at close to $22.4 million in stock, and David Harding’s Winton Capital Management was right behind this move, as the fund dropped about $3.4 million worth. These transactions are interesting, as total hedge fund interest was cut by 4 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to Endo International plc (NASDAQ:ENDP). We will take a look at The Michaels Companies, Inc. (NASDAQ:MIK), Northwest Bancshares, Inc. (NASDAQ:NWBI), InVitae Corporation (NYSE:NVTA), and Great Western Bancorp Inc (NYSE:GWB). This group of stocks’ market caps resemble ENDP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MIK 32 157799 2
NWBI 11 68814 2
NVTA 28 348354 4
GWB 14 55991 3
Average 21.25 157740 2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.25 hedge funds with bullish positions and the average amount invested in these stocks was $158 million. That figure was $337 million in ENDP’s case. The Michaels Companies, Inc. (NASDAQ:MIK) is the most popular stock in this table. On the other hand Northwest Bancshares, Inc. (NASDAQ:NWBI) is the least popular one with only 11 bullish hedge fund positions. Endo International plc (NASDAQ:ENDP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately ENDP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ENDP investors were disappointed as the stock returned -35.5% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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