Is EP Energy Corp (EPE) a Good Stock to Invest in?

The 700+ hedge funds and money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund positions. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards EP Energy Corp (NYSE:EPE) .

EP Energy Corp (NYSE:EPE) was in 15 hedge funds’ portfolios at the end of the third quarter of 2016. EPE experienced an increase in support from the world’s most successful money managers last quarter, as there had been 13 hedge funds in our database with EPE holdings at the end of June. At the end of this article we will also compare EPE to other stocks including United Community Banks Inc (NASDAQ:UCBI), TASER International, Inc. (NASDAQ:TASR), and CSG Systems International, Inc. (NASDAQ:CSGS) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

Now, we’re going to take a gander at the new action regarding EP Energy Corp (NYSE:EPE).

What does the smart money think about EP Energy Corp (NYSE:EPE)?

At the end of September, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in EP Energy Corp (NYSE:EPE), up by 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EPE over the last five 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.

When looking at the institutional investors followed by Insider Monkey, Cliff Asness’ AQR Capital Management has the biggest position in EP Energy Corp (NYSE:EPE), worth close to $6.7 million. On AQR Capital Management’s heels is Citadel Investment Group, led by Ken Griffin, which holds a $3.1 million position. Some other professional money managers with similar optimism contain David Costen Haley’s HBK Investments, Neil Chriss’ Hutchin Hill Capital and Robert Vollero, and Gentry T. Beach’s Vollero Beach Capital Partners. We should note that Vollero Beach Capital Partners is 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.

As aggregate interest increased, key money managers were breaking ground themselves. Clinton Group, led by George Hall, initiated the most outsized position in EP Energy Corp (NYSE:EPE). Clinton Group had $0.4 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new EPE investors: Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners, Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital, and Joel Greenblatt’s Gotham Asset Management.

Let’s go over hedge fund activity in other stocks similar to EP Energy Corp (NYSE:EPE). These stocks are United Community Banks Inc (NASDAQ:UCBI), TASER International, Inc. (NASDAQ:TASR), CSG Systems International, Inc. (NASDAQ:CSGS), and 8×8, Inc. (NASDAQ:EGHT). This group of stocks’ market caps resemble EPE’s market cap.

As you can see these stocks had an average of 15 funds with long positions and the average amount invested in these stocks was $119 million. That figure was just $18 million in EPE’s case. 8×8, Inc. (NASDAQ:EGHT) is the most popular stock in this table. On the other hand United Community Banks Inc (NASDAQ:UCBI) is the least popular one with only 12 bullish hedge fund positions. EP Energy Corp (NYSE:EPE) 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. In this regard 8×8, Inc. (NASDAQ:EGHT) might be a better candidate to consider taking a long position in.

Disclosure: None