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Is Enova International Inc (ENVA) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Enova International Inc (NYSE:ENVA).

Is Enova International Inc (NYSE:ENVA) a bargain? Investors who are in the know are becoming less confident. The number of long hedge fund positions were trimmed by 4 recently. Our calculations also showed that ENVA isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Joe Huber - Huber Capital Management

Joe Huber of Huber Capital Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a peek at the new hedge fund action regarding Enova International Inc (NYSE:ENVA).

What does smart money think about Enova International Inc (NYSE:ENVA)?

At the end of the first quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of -19% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in ENVA over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Enova International Inc (NYSE:ENVA), which was worth $34.8 million at the end of the third quarter. On the second spot was 683 Capital Partners which amassed $15.9 million worth of shares. Prescott Group Capital Management, Millennium Management, and Huber Capital 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 Prescott Group Capital Management allocated the biggest weight to Enova International Inc (NYSE:ENVA), around 4.44% of its 13F portfolio. Voce Capital is also relatively very bullish on the stock, earmarking 2.11 percent of its 13F equity portfolio to ENVA.

Judging by the fact that Enova International Inc (NYSE:ENVA) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few money managers who were dropping their positions entirely in the first quarter. Intriguingly, Michael A. Price and Amos Meron’s Empyrean Capital Partners sold off the largest stake of all the hedgies watched by Insider Monkey, totaling an estimated $1.2 million in stock. Mark Coe’s fund, Intrinsic Edge Capital, also cut its stock, about $1.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 4 funds in the first quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Enova International Inc (NYSE:ENVA) but similarly valued. These stocks are Pacific Biosciences of California, Inc. (NASDAQ:PACB), Mesoblast Limited (NASDAQ:MESO), Boingo Wireless Inc (NASDAQ:WIFI), and Dorian LPG Ltd (NYSE:LPG). This group of stocks’ market values resemble ENVA’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PACB 18 75493 -5
MESO 4 1302 3
WIFI 16 149530 4
LPG 17 107158 -5
Average 13.75 83371 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $83 million. That figure was $82 million in ENVA’s case. Pacific Biosciences of California (NASDAQ:PACB) is the most popular stock in this table. On the other hand Mesoblast Limited (NASDAQ:MESO) is the least popular one with only 4 bullish hedge fund positions. Enova International Inc (NYSE:ENVA) is not the most popular stock in this group but hedge fund interest is still above average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately ENVA wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on ENVA were disappointed as the stock returned 0.3% 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 10 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.