Is Enel Americas S.A. (ENIA) A Good Stock To Buy?

Abigail Fisher

Sat, Jun 29, 2019, 6:13 PM

After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms' equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Enel Americas S.A. (NYSE:ENIA).

Enel Americas S.A. (NYSE:ENIA) investors should be aware of an increase in activity from the world's largest hedge funds recently. Our calculations also showed that ENIA isn't among the 30 most popular stocks among hedge funds.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 market by 40 percentage points since May 2014 through May 30, 2019 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

We're going to check out the recent hedge fund action encompassing Enel Americas S.A. (NYSE:ENIA).

How are hedge funds trading Enel Americas S.A. (NYSE:ENIA)?

Heading into the second quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the fourth quarter of 2018. The graph below displays the number of hedge funds with bullish position in ENIA over the last 15 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, AQR Capital Management held the most valuable stake in Enel Americas S.A. (NYSE:ENIA), which was worth $50.8 million at the end of the first quarter. On the second spot was Arrowstreet Capital which amassed $34.5 million worth of shares. Moreover, Renaissance Technologies, GLG Partners, and Zimmer Partners were also bullish on Enel Americas S.A. (NYSE:ENIA), allocating a large percentage of their portfolios to this stock.

As aggregate interest increased, key hedge funds have jumped into Enel Americas S.A. (NYSE:ENIA) headfirst. GLG Partners, managed by Noam Gottesman, initiated the largest position in Enel Americas S.A. (NYSE:ENIA). GLG Partners had $23.7 million invested in the company at the end of the quarter. Stuart J. Zimmer's Zimmer Partners also initiated a $10.5 million position during the quarter. The other funds with new positions in the stock are Mike Vranos's Ellington, Benjamin A. Smith's Laurion Capital Management, and Zilvinas Mecelis's Covalis Capital.

Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Enel Americas S.A. (NYSE:ENIA) but similarly valued. We will take a look at W.R. Berkley Corporation (NYSE:WRB), Open Text Corporation (NASDAQ:OTEX), Federal Realty Investment Trust (NYSE:FRT), and Equity Lifestyle Properties, Inc. (NYSE:ELS). This group of stocks' market caps are closest to ENIA's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WRB,18,253246,-5 OTEX,22,791223,2 FRT,17,226357,0 ELS,15,571959,0 Average,18,460696,-0.75 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $461 million. That figure was $152 million in ENIA's case. Open Text Corporation (NASDAQ:OTEX) is the most popular stock in this table. On the other hand Equity Lifestyle Properties, Inc. (NYSE:ELS) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Enel Americas S.A. (NYSE:ENIA) is even less popular than ELS. Hedge funds dodged a bullet by taking a bearish stance towards ENIA. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ENIA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ENIA investors were disappointed as the stock returned -2.3% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.

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

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