Should You Buy Entergy Corporation (ETR)?

You probably know from experience that there is not as much information on small-cap companies as there is on large companies. Of course, this makes it really hard and difficult for individual investors to make proper and accurate analysis of certain small-cap companies. However, well-known and successful hedge fund investors like Carl Icahn and George Soros hold the necessary resources and abilities to conduct an extensive stock analysis on small-cap stocks, which enable them to make millions of dollars by identifying potential winners within the small-cap galaxy of stocks. This represents the main reason why Insider Monkey takes notice of the hedge fund activity in these overlooked stocks.

Entergy Corporation (NYSE:ETR) was in 24 hedge funds’ portfolios at the end of the third quarter of 2016. ETR investors should be aware of an increase in hedge fund sentiment of late. There were 23 hedge funds in our database with ETR holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as DENTSPLY International Inc. (NASDAQ:XRAY), Henry Schein, Inc. (NASDAQ:HSIC), and Royal Caribbean Cruises Ltd. (NYSE:RCL) to gather more data points.

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.

What have hedge funds been doing with Entergy Corporation (NYSE:ETR)?

At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 4% boost from the previous quarter. Hedge fund ownership has remained relatively flat over the past two quarters, after witnessing more volatility in the 2 quarters prior to those. With hedge funds’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, AQR Capital Management, managed by Cliff Asness, holds the largest position in Entergy Corporation (NYSE:ETR). AQR Capital Management has a $307.5 million position in the stock. The second largest stake is held by Renaissance Technologies, led by Jim Simons, holding a $247.4 million position. Other peers that hold long positions encompass Richard S. Pzena’s Pzena Investment Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Joe Huber’s Huber Capital Management.

As one would reasonably expect, key money managers were leading the bulls’ herd. Citadel Investment Group, managed by Ken Griffin, initiated the largest position in Entergy Corporation (NYSE:ETR). Citadel Investment Group had $6.5 million invested in the company at the end of the quarter. The other funds with new positions in the stock are Michael Platt and William Reeves’ BlueCrest Capital Mgmt., David Costen Haley’s HBK Investments, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Entergy Corporation (NYSE:ETR) but similarly valued. We will take a look at DENTSPLY International Inc. (NASDAQ:XRAY), Henry Schein, Inc. (NASDAQ:HSIC), Royal Caribbean Cruises Ltd. (NYSE:RCL), and Agilent Technologies Inc. (NYSE:A). This group of stocks’ market values resemble ETR’s market value.

As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $977 million. That figure was $852 million in ETR’s case. Agilent Technologies Inc. (NYSE:A) is the most popular stock in this table. On the other hand Henry Schein, Inc. (NASDAQ:HSIC) is the least popular one with only 23 bullish hedge fund positions. Entergy Corporation (NYSE:ETR) 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 Agilent might be a better candidate to consider a long position in.

Disclosure: None