How Entegra Financial Corp (ENFC) Stacks Up Against Its Peers

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

Is Entegra Financial Corp (NASDAQ:ENFC) the right investment to pursue these days? Investors who are in the know are indeed taking an optimistic view. The number of long hedge fund bets increased by 1 recently. At the end of this article we will also compare ENFC to other stocks including Community Bankers Trust Corp. (NASDAQ:ESXB), Unique Fabricating Inc (NYSEMKT:UFAB), and Wheeler Real Estate Investment Trust Inc (NASDAQ:WHLR) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How have hedgies been trading Entegra Financial Corp (NASDAQ:ENFC)?

Heading into the fourth quarter of 2016, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a rise of 20% from the previous quarter. The graph below displays the number of hedge funds with bullish positions in ENFC over the last 5 quarters, which has inched up during that time. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, EJF Capital, led by Emanuel J. Friedman, holds the most valuable position in Entegra Financial Corp (NASDAQ:ENFC). EJF Capital has an $11.3 million position in the stock. The second largest stake is held by Castine Capital Management, led by Paul Magidson, Jonathan Cohen and Ostrom Enders, which has a $1.9 million position. Remaining members of the smart money that hold long positions encompass Ryan Heslop and Ariel Warszawski’s Firefly Value Partners, David M. Knott’s Dorset Management, and Jeffrey Gendell’s Tontine Asset Management. We should note that two of these hedge funds (Firefly Value Partners and Dorset Management) are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

Now, key money managers have been driving this bullishness. Tontine Asset Management assembled the most valuable position in Entegra Financial Corp (NASDAQ:ENFC). Tontine Asset Management had $0.7 million invested in the company at the end of the quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Entegra Financial Corp (NASDAQ:ENFC) but similarly valued. We will take a look at Community Bankers Trust Corp. (NASDAQ:ESXB), Unique Fabricating Inc (NYSEMKT:UFAB), Wheeler Real Estate Investment Trust Inc (NASDAQ:WHLR), and Rocket Fuel Inc (NASDAQ:FUEL). This group of stocks’ market values match ENFC’s market value.

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $16 million in ENFC’s case. Wheeler Real Estate Investment Trust Inc (NASDAQ:WHLR) is the most popular stock in this table. On the other hand Community Bankers Trust Corp. (NASDAQ:ESXB) is the least popular one with only 5 bullish hedge fund positions. Entegra Financial Corp (NASDAQ:ENFC) 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. In this regard WHLR might be a better candidate to consider taking a long position in.

Disclosure: None