The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Energen Corporation (NYSE:EGN) from the perspective of those elite funds.
Is Energen Corporation (NYSE:EGN) a first-rate investment today? Money managers are taking a pessimistic view. The number of bullish hedge fund positions shrunk by 9 in recent months. 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 MAXIMUS, Inc. (NYSE:MMS), Bio-Rad Laboratories, Inc. (NYSE:BIO), and Lincoln Electric Holdings, Inc. (NASDAQ:LECO) to gather more data points.
Now, let’s take a glance at the fresh action surrounding Energen Corporation (NYSE:EGN).
How have hedgies been trading Energen Corporation (NYSE:EGN)?
At the end of the third quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -30% from one quarter earlier. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Israel Englander’s Millennium Management has the largest position in Energen Corporation (NYSE:EGN), worth close to $164.9 million, accounting for 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is George Soros of Soros Fund Management, with a $49 million position; 0.7% of its 13F portfolio is allocated to the stock. Other professional money managers with similar optimism include Rob Citrone’s Discovery Capital Management, Todd J. Kantor’s Encompass Capital Advisors and Cliff Asness’ AQR Capital Management.
Seeing as Energen Corporation (NYSE:EGN) has faced a declination in interest from the aggregate hedge fund industry, we can see that there was a specific group of fund managers who were dropping their entire stakes last quarter. It’s worth mentioning that Clint Carlson’s Carlson Capital dumped the largest stake of the 700 funds monitored by Insider Monkey, worth close to $69.6 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $37.9 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 9 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Energen Corporation (NYSE:EGN) but similarly valued. We will take a look at MAXIMUS, Inc. (NYSE:MMS), Bio-Rad Laboratories, Inc. (NYSE:BIO), Lincoln Electric Holdings, Inc. (NASDAQ:LECO), and Godaddy Inc (NYSE:GDDY). This group of stocks’ market values resemble EGN’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $260 million. That figure was $339 million in EGN’s case. Bio-Rad Laboratories, Inc. (NYSE:BIO) is the most popular stock in this table. On the other hand MAXIMUS, Inc. (NYSE:MMS) is the least popular one with only 10 bullish hedge fund positions. Energen Corporation (NYSE:EGN) 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. In this regard BIO might be a better candidate to consider a long position.