Is Eni SpA (E) A Good Stock To Buy?
In this article we will take a look at whether hedge funds think Eni SpA (NYSE:E) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Eni SpA (NYSE:E) a good stock to buy now? Eni SpA was in 5 hedge funds' portfolios at the end of September. The all time high for this statistics is 9. E investors should pay attention to a decrease in hedge fund sentiment of late. There were 8 hedge funds in our database with E holdings at the end of June. Our calculations also showed that E isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Ken Fisher of Fisher Asset Management
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now let's take a look at the fresh hedge fund action regarding Eni SpA (NYSE:E).
Hedge fund activity in Eni SpA (NYSE:E)
At Q3's end, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -38% from one quarter earlier. On the other hand, there were a total of 6 hedge funds with a bullish position in E a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Fisher Asset Management held the most valuable stake in Eni SpA (NYSE:E), which was worth $15.5 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $3.8 million worth of shares. Citadel Investment Group, Citadel Investment Group, and CSat Investment Advisory were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position CSat Investment Advisory allocated the biggest weight to Eni SpA (NYSE:E), around 0.07% of its 13F portfolio. Fisher Asset Management is also relatively very bullish on the stock, designating 0.01 percent of its 13F equity portfolio to E.
Because Eni SpA (NYSE:E) has witnessed declining sentiment from the smart money, it's safe to say that there exists a select few hedge funds who sold off their entire stakes last quarter. At the top of the heap, Israel Englander's Millennium Management sold off the largest position of the "upper crust" of funds monitored by Insider Monkey, worth about $6.7 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dropped about $2.1 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 3 funds last quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Eni SpA (NYSE:E) but similarly valued. We will take a look at ING Groep N.V. (NYSE:ING), Orange SA (NYSE:ORAN), AutoZone, Inc. (NYSE:AZO), Yum! Brands, Inc. (NYSE:YUM), D.R. Horton, Inc. (NYSE:DHI), STMicroelectronics N.V. (NYSE:STM), and The Travelers Companies Inc (NYSE:TRV). This group of stocks' market caps match E's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ING,9,279146,-4 ORAN,4,5851,1 AZO,53,2107685,-2 YUM,42,1382033,-5 DHI,62,2136859,-4 STM,21,180953,9 TRV,35,418876,7 Average,32.3,930200,0.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.3 hedge funds with bullish positions and the average amount invested in these stocks was $930 million. That figure was $22 million in E's case. D.R. Horton, Inc. (NYSE:DHI) is the most popular stock in this table. On the other hand Orange SA (NYSE:ORAN) is the least popular one with only 4 bullish hedge fund positions. Eni SpA (NYSE:E) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for E is 19.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on E as the stock returned 31.5% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
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