Do Hedge Funds Love Eni SpA (E)?
Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Eni SpA (NYSE:E), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Hedge fund interest in Eni SpA (NYSE:E) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that E isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings). 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 Banco Bradesco SA (NYSE:BBD), Ambev SA (NYSE:ABEV), and Canadian Imperial Bank of Commerce (NYSE:CM) to gather more data points.
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, an activist hedge fund wants to buy this $27 biotech stock for $50. So, we recommended a long position to our monthly premium newsletter subscribers. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let's take a peek at the new hedge fund action encompassing Eni SpA (NYSE:E).
Do Hedge Funds Think E Is A Good Stock To Buy Now?
At Q1's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards E over the last 23 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital has the biggest position in Eni SpA (NYSE:E), worth close to $46.2 million, accounting for 0.1% of its total 13F portfolio. On Arrowstreet Capital's heels is Fisher Asset Management, led by Ken Fisher, holding a $24.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions include Ken Griffin's Citadel Investment Group, and Israel Englander's Millennium Management. In terms of the portfolio weights assigned to each position Arrowstreet Capital allocated the biggest weight to Eni SpA (NYSE:E), around 0.06% of its 13F portfolio. Fisher Asset Management is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to E.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Quantamental Technologies. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Millennium Management).
Let's also examine hedge fund activity in other stocks similar to Eni SpA (NYSE:E). These stocks are Banco Bradesco SA (NYSE:BBD), Ambev SA (NYSE:ABEV), Canadian Imperial Bank of Commerce (NYSE:CM), Thomson Reuters Corporation (NYSE:TRI), Baxter International Inc. (NYSE:BAX), Public Storage (NYSE:PSA), and Johnson Controls International plc (NYSE:JCI). This group of stocks' market values are similar to E's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BBD,19,186540,2 ABEV,18,228714,0 CM,14,408020,1 TRI,28,395480,5 BAX,40,3357530,-2 PSA,26,929024,-5 JCI,41,1023861,7 Average,26.6,932738,1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $933 million. That figure was $74 million in E's case. Johnson Controls International plc (NYSE:JCI) is the most popular stock in this table. On the other hand Canadian Imperial Bank of Commerce (NYSE:CM) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Eni SpA (NYSE:E) is even less popular than CM. Our overall hedge fund sentiment score for E is 18.3. 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. Hedge funds dodged a bullet by taking a bearish stance towards E. Our calculations showed that the top 10 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.2% in 2021 through June 11th but managed to beat the market again by 3.3 percentage points. Unfortunately E wasn't nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); E investors were disappointed as the stock returned 6% since the end of the first quarter (through 6/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
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