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Is Enterprise Products Partners L.P. (EPD) Going to Burn These Hedge Funds?

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Enterprise Products Partners L.P. (NYSE:EPD) based on those filings.

Enterprise Products Partners L.P. (NYSE:EPD) was in 21 hedge funds’ portfolios at the end of the third quarter of 2019. EPD investors should be aware of an increase in enthusiasm from smart money recently. There were 19 hedge funds in our database with EPD holdings at the end of the previous quarter. Our calculations also showed that EPD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are several signals shareholders use to assess stocks. A pair of the most useful signals are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the broader indices by a superb amount (see the details here).

Charles Davidson - Wexford Capital

Charles Davidson of Wexford Capital

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s analyze the fresh hedge fund action encompassing Enterprise Products Partners L.P. (NYSE:EPD).

What does smart money think about Enterprise Products Partners L.P. (NYSE:EPD)?

At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EPD over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Zimmer Partners, managed by Stuart J. Zimmer, holds the biggest position in Enterprise Products Partners L.P. (NYSE:EPD). Zimmer Partners has a $130.9 million position in the stock, comprising 1.4% of its 13F portfolio. Sitting at the No. 2 spot is Marshall Wace, led by Paul Marshall and Ian Wace, holding a $41.2 million position; 0.3% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish include John Osterweis’s Osterweis Capital Management, Charles Davidson and Joseph Jacobs’s Wexford Capital and James Dondero’s Highland Capital Management. In terms of the portfolio weights assigned to each position BP Capital allocated the biggest weight to Enterprise Products Partners L.P. (NYSE:EPD), around 8.78% of its 13F portfolio. Wexford Capital is also relatively very bullish on the stock, designating 4.27 percent of its 13F equity portfolio to EPD.

Consequently, key money managers were leading the bulls’ herd. Marshall Wace, managed by Paul Marshall and Ian Wace, initiated the biggest position in Enterprise Products Partners L.P. (NYSE:EPD). Marshall Wace had $41.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $2.2 million investment in the stock during the quarter. The other funds with brand new EPD positions are Richard Chilton’s Chilton Investment Company and Paul Cantor, Joseph Weiss, and Will Wurm’s Beech Hill Partners.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Enterprise Products Partners L.P. (NYSE:EPD) but similarly valued. These stocks are The PNC Financial Services Group Inc. (NYSE:PNC), Intuitive Surgical, Inc. (NASDAQ:ISRG), Anthem Inc (NYSE:ANTM), and VMware, Inc. (NYSE:VMW). This group of stocks’ market valuations match EPD’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PNC 39 2074279 1
ISRG 41 1400552 4
ANTM 59 3721999 -7
VMW 35 985185 1
Average 43.5 2045504 -0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 43.5 hedge funds with bullish positions and the average amount invested in these stocks was $2046 million. That figure was $302 million in EPD’s case. Anthem Inc (NYSE:ANTM) is the most popular stock in this table. On the other hand VMware, Inc. (NYSE:VMW) is the least popular one with only 35 bullish hedge fund positions. Compared to these stocks Enterprise Products Partners L.P. (NYSE:EPD) is even less popular than VMW. Hedge funds dodged a bullet by taking a bearish stance towards EPD. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately EPD wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); EPD investors were disappointed as the stock returned -6.4% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.

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

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