Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 817 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Energous Corporation (NASDAQ:WATT), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Energous Corporation (WATT) a good stock to buy now? WATT was in 6 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 8. WATT investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 8 hedge funds in our database with WATT positions at the end of the second quarter. Our calculations also showed that WATT 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.
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. With all of this in mind we’re going to take a gander at the new hedge fund action surrounding Energous Corporation (NASDAQ:WATT).
How have hedgies been trading Energous Corporation (NASDAQ:WATT)?
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WATT over the last 21 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, D E Shaw was the largest shareholder of Energous Corporation (NASDAQ:WATT), with a stake worth $1.1 million reported as of the end of September. Trailing D E Shaw was Citadel Investment Group, which amassed a stake valued at $0.6 million. Algert Global, Millennium Management, and OZ Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Algert Global allocated the biggest weight to Energous Corporation (NASDAQ:WATT), around 0.05% of its 13F portfolio. D E Shaw is also relatively very bullish on the stock, dishing out 0.0011 percent of its 13F equity portfolio to WATT.
Because Energous Corporation (NASDAQ:WATT) has experienced falling interest from hedge fund managers, we can see that there was a specific group of money managers who sold off their positions entirely by the end of the third quarter. At the top of the heap, Donald Sussman’s Paloma Partners dropped the biggest position of all the hedgies tracked by Insider Monkey, valued at about $0.5 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund dropped about $0.2 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Energous Corporation (NASDAQ:WATT) but similarly valued. These stocks are BayCom Corp (NASDAQ:BCML), Oxford Square Capital Corp. (NASDAQ:OXSQ), Cidara Therapeutics Inc (NASDAQ:CDTX), Intellicheck Inc. (NASDAQ:IDN), Security National Financial Corp. (NASDAQ:SNFCA), First Business Financial Services Inc (NASDAQ:FBIZ), and First Bank (NASDAQ:FRBA). All of these stocks’ market caps match WATT’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 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $2 million in WATT’s case. Cidara Therapeutics Inc (NASDAQ:CDTX) is the most popular stock in this table. On the other hand Intellicheck Inc. (NASDAQ:IDN) is the least popular one with only 1 bullish hedge fund positions. Energous Corporation (NASDAQ:WATT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WATT is 61.2. 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. This is a slightly positive signal but 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and beat the market again by 16.1 percentage points. Unfortunately WATT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WATT were disappointed as the stock returned -31.2% since the end of September (through 11/27) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.