Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. The second half of 2015 and the first few months of this year was a stressful period for hedge funds. However, things have been taking a turn for the better in the second half of this year. Small-cap stocks which hedge funds are usually overweight outperformed the market by double digits and it may be a good time to pay attention to hedge funds’ picks before it is too late. In this article we are going to analyze the hedge fund sentiment towards Endurance Specialty Holdings Ltd. (NYSE:ENH) to find out whether it was one of their high conviction long-term ideas.
Endurance Specialty Holdings Ltd. (NYSE:ENH) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds’ portfolios at the end of September. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), HEICO Corporation (NYSE:HEI), and Guidewire Software Inc (NYSE:GWRE) to gather more data points.
Follow Endurance Specialty Holdings Ltd (NYSE:ENH)
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What does the smart money think about Endurance Specialty Holdings Ltd. (NYSE:ENH)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the previous quarter. The graph below displays the number of hedge funds with bullish position in ENH over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Ric Dillon’s Diamond Hill Capital holds the number one position in Endurance Specialty Holdings Ltd. (NYSE:ENH), which has a $67 million position in the stock. On Diamond Hill Capital’s heels is Richard S. Pzena to Pzena Investment Management, which holds a $53.4 million position. Some other professional money managers that are bullish contain Israel Englander’s Millennium Management, Scott Wallace’s Wallace Capital Management and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Seeing as Endurance Specialty Holdings Ltd. (NYSE:ENH) has sustained declining sentiment from the aggregate hedge fund industry, we can see that there were a few funds who sold off their entire stakes by the end of the third quarter. It’s worth mentioning that Matthew Tewksbury’s Stevens Capital Management got rid of the biggest investment of the 700 funds tracked by Insider Monkey, worth an estimated $2 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund sold off about $1.6 million worth of shares.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Endurance Specialty Holdings Ltd. (NYSE:ENH) but similarly valued. We will take a look at Randgold Resources Ltd. (ADR) (NASDAQ:GOLD), HEICO Corporation (NYSE:HEI), Guidewire Software Inc (NYSE:GWRE), and Taubman Centers, Inc. (NYSE:TCO). This group of stocks’ market caps are similar to ENH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GOLD | 18 | 179620 | 0 |
| HEI | 20 | 380440 | -3 |
| GWRE | 22 | 118946 | 5 |
| TCO | 19 | 436312 | 1 |
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $279 million. That figure was $307 million in ENH’s case. Guidewire Software Inc (NYSE:GWRE) is the most popular stock in this table. On the other hand Randgold Resources Ltd. (ADR) (NASDAQ:GOLD) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Endurance Specialty Holdings Ltd. (NYSE:ENH) is even less popular than GOLD. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
