Reputable billionaire investors such as Jim Simons, Cliff Asness and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is EnLink Midstream LLC (NYSE:ENLC) the right investment to pursue these days? The best stock pickers are getting less bullish. The number of bullish hedge fund positions went down by 5 lately. Our calculations also showed that enlc isn’t among the 30 most popular stocks among hedge funds. ENLC was in 10 hedge funds’ portfolios at the end of the first quarter of 2019. There were 15 hedge funds in our database with ENLC positions at the end of the previous quarter.
In the 21st century investor’s toolkit there are plenty of methods stock traders use to appraise their stock investments. A couple of the most innovative methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite money managers can outpace the market by a superb amount (see the details here).
We’re going to take a look at the recent hedge fund action surrounding EnLink Midstream LLC (NYSE:ENLC).
How have hedgies been trading EnLink Midstream LLC (NYSE:ENLC)?
Heading into the second quarter of 2019, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in ENLC over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Nokomis Capital held the most valuable stake in EnLink Midstream LLC (NYSE:ENLC), which was worth $18 million at the end of the first quarter. On the second spot was Vertex One Asset Management which amassed $11.1 million worth of shares. Moreover, BP Capital, Arrowstreet Capital, and Highland Capital Management were also bullish on EnLink Midstream LLC (NYSE:ENLC), allocating a large percentage of their portfolios to this stock.
Due to the fact that EnLink Midstream LLC (NYSE:ENLC) has witnessed bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few fund managers who sold off their positions entirely last quarter. At the top of the heap, David Costen Haley’s HBK Investments sold off the biggest investment of all the hedgies monitored by Insider Monkey, worth close to $13.3 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund cut about $5.9 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 5 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to EnLink Midstream LLC (NYSE:ENLC). We will take a look at Carlyle Group LP (NASDAQ:CG), People’s United Financial, Inc. (NASDAQ:PBCT), Companhia Brasileira de Distrib. (NYSE:CBD), and Dunkin Brands Group Inc (NASDAQ:DNKN). This group of stocks’ market caps are closest to ENLC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CG | 7 | 122872 | -3 |
| PBCT | 20 | 176840 | -2 |
| CBD | 12 | 93559 | -1 |
| DNKN | 22 | 186239 | 4 |
| Average | 15.25 | 144878 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.25 hedge funds with bullish positions and the average amount invested in these stocks was $145 million. That figure was $39 million in ENLC’s case. Dunkin Brands Group Inc (NASDAQ:DNKN) is the most popular stock in this table. On the other hand Carlyle Group LP (NASDAQ:CG) is the least popular one with only 7 bullish hedge fund positions. EnLink Midstream LLC (NYSE:ENLC) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ENLC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); ENLC investors were disappointed as the stock returned -21.2% 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.
