Is ENDP A Good Stock To Buy Now?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Endo International plc (NASDAQ:ENDP).

Is ENDP a good stock to buy now? Endo International plc (NASDAQ:ENDP) was in 17 hedge funds’ portfolios at the end of September. The all time high for this statistic is 61. ENDP has experienced a decrease in enthusiasm from smart money recently. There were 21 hedge funds in our database with ENDP holdings at the end of June. Our calculations also showed that ENDP isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 66 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.


Larry Robbins of Glenview Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to review the fresh hedge fund action surrounding Endo International plc (NASDAQ:ENDP).

Do Hedge Funds Think ENDP Is A Good Stock To Buy Now?

At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from the second quarter of 2020. By comparison, 19 hedge funds held shares or bullish call options in ENDP a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Endo International plc (NASDAQ:ENDP) was held by Renaissance Technologies, which reported holding $60.2 million worth of stock at the end of September. It was followed by Paulson & Co with a $47.8 million position. Other investors bullish on the company included Glenview Capital, Contrarius Investment Management, and Point72 Asset Management. In terms of the portfolio weights assigned to each position Paulson & Co allocated the biggest weight to Endo International plc (NASDAQ:ENDP), around 1.49% of its 13F portfolio. Glenview Capital is also relatively very bullish on the stock, designating 0.9 percent of its 13F equity portfolio to ENDP.

Because Endo International plc (NASDAQ:ENDP) has experienced a decline in interest from the entirety of the hedge funds we track, we can see that there exists a select few hedgies that slashed their full holdings last quarter. It’s worth mentioning that D. E. Shaw’s D E Shaw dropped the biggest position of all the hedgies monitored by Insider Monkey, valued at an estimated $1 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund said goodbye to about $1 million worth. These moves are important to note, as aggregate 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 Orion Engineered Carbons SA (NYSE:OEC), Textainer Group Holdings Limited (NYSE:TGH), Seritage Growth Properties (NYSE:SRG), Phoenix Tree Holdings Limited (NYSE:DNK), Nantkwest Inc (NASDAQ:NK), Central Securities Corporation (NYSE:CET), and Vapotherm, Inc. (NYSE:VAPO). This group of stocks’ market values are closest to ENDP’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
OEC 20 130513 -1
TGH 9 17681 0
SRG 12 126062 -6
DNK 3 151959 0
NK 10 6919 2
CET 3 16311 0
VAPO 18 161202 0
Average 10.7 87235 -0.7

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.7 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $160 million in ENDP’s case. Orion Engineered Carbons SA (NYSE:OEC) is the most popular stock in this table. On the other hand Phoenix Tree Holdings Limited (NYSE:DNK) is the least popular one with only 3 bullish hedge fund positions. Endo International plc (NASDAQ:ENDP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for ENDP is 50.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on ENDP as the stock returned 67% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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