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Is Global Eagle Entertainment Inc. (ENT) A Good Stock To Buy?

“Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Global Eagle Entertainment Inc. (NASDAQ:ENT).

Global Eagle Entertainment Inc. (NASDAQ:ENT) was in 13 hedge funds’ portfolios at the end of the third quarter of 2018. ENT has experienced a decrease in support from the world’s most elite money managers lately. There were 14 hedge funds in our database with ENT holdings at the end of the previous quarter. Our calculations also showed that ENT isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Abrams

Let’s take a glance at the key hedge fund action surrounding Global Eagle Entertainment Inc. (NASDAQ:ENT).

What does the smart money think about Global Eagle Entertainment Inc. (NASDAQ:ENT)?

Heading into the fourth quarter of 2018, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the second quarter of 2018. On the other hand, there were a total of 14 hedge funds with a bullish position in ENT at the beginning of this year. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

ENT_dec2018

The largest stake in Global Eagle Entertainment Inc. (NASDAQ:ENT) was held by PAR Capital Management, which reported holding $81.7 million worth of stock at the end of September. It was followed by Nantahala Capital Management with a $25.4 million position. Other investors bullish on the company included Abrams Capital Management, Sound Point Capital, and Tenzing Global Investors.

Seeing as Global Eagle Entertainment Inc. (NASDAQ:ENT) has faced bearish sentiment from the smart money, it’s safe to say that there lies a certain “tier” of money managers that elected to cut their full holdings in the third quarter. Interestingly, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners dropped the biggest investment of the 700 funds monitored by Insider Monkey, worth an estimated $0.2 million in stock, and Phil Frohlich’s Prescott Group Capital Management was right behind this move, as the fund said goodbye to about $0.2 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 1 funds in the third quarter.

Let’s go over hedge fund activity in other stocks similar to Global Eagle Entertainment Inc. (NASDAQ:ENT). These stocks are Shiloh Industries, Inc. (NASDAQ:SHLO), Twelve Seas Investment Company (NASDAQ:TWLV), ASLAN Pharmaceuticals Limited (NASDAQ:ASLN), and Great Ajax Corp (NYSE:AJX). This group of stocks’ market caps resemble ENT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SHLO 7 5407 -2
TWLV 9 34244 -2
ASLN 3 8204 0
AJX 2 2856 -1
Average 5.25 12678 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.25 hedge funds with bullish positions and the average amount invested in these stocks was $13 million. That figure was $139 million in ENT’s case. Twelve Seas Investment Company (NASDAQ:TWLV) is the most popular stock in this table. On the other hand Great Ajax Corp (NYSE:AJX) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Global Eagle Entertainment Inc. (NASDAQ:ENT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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