At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). We reversed our stance on March 25th after seeing unprecedented fiscal and monetary stimulus unleashed by the Fed and the Congress. This is the perfect market for stock pickers, now that the stocks are fully valued again. In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Enterprise Products Partners L.P. (NYSE:EPD) at the end of the second quarter and determine whether the smart money was really smart about this stock.
Is Enterprise Products Partners L.P. (NYSE:EPD) undervalued? The best stock pickers were getting more bullish. The number of bullish hedge fund bets inched up by 4 recently. Enterprise Products Partners L.P. (NYSE:EPD) was in 30 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EPD isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 26 hedge funds in our database with EPD positions at the end of the first quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Louis Bacon Moore of Moore Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. With all of this in mind we’re going to go over the new hedge fund action encompassing Enterprise Products Partners L.P. (NYSE:EPD).
What does smart money think about Enterprise Products Partners L.P. (NYSE:EPD)?
At Q2’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EPD over the last 20 quarters. With the smart money’s capital changing hands, there exists a select group of notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Zimmer Partners was the largest shareholder of Enterprise Products Partners L.P. (NYSE:EPD), with a stake worth $68.1 million reported as of the end of September. Trailing Zimmer Partners was Moore Global Investments, which amassed a stake valued at $39.4 million. Arrowstreet Capital, Citadel Investment Group, and Heronetta Management 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 Heronetta Management allocated the biggest weight to Enterprise Products Partners L.P. (NYSE:EPD), around 14.89% of its 13F portfolio. Kamunting Street Capital is also relatively very bullish on the stock, setting aside 6.73 percent of its 13F equity portfolio to EPD.
As aggregate interest increased, some big names have been driving this bullishness. Precept Capital Management, managed by Blair Baker, assembled the biggest position in Enterprise Products Partners L.P. (NYSE:EPD). Precept Capital Management had $13.4 million invested in the company at the end of the quarter. Jerome L. Simon’s Lonestar Capital Management also initiated a $7.3 million position during the quarter. The other funds with brand new EPD positions are Allan Teh’s Kamunting Street Capital, Lawrence Kam’s Sonic Capital, and Ken Griffin’s Citadel Investment Group.
Let’s now review hedge fund activity in other stocks similar to Enterprise Products Partners L.P. (NYSE:EPD). We will take a look at Prudential Public Limited Company (NYSE:PUK), American Electric Power Company, Inc. (NYSE:AEP), DuPont de Nemours Inc (NYSE:DD), The Kraft Heinz Company (NASDAQ:KHC), Sumitomo Mitsui Financial Grp, Inc. (NYSE:SMFG), DexCom, Inc. (NASDAQ:DXCM), and Digital Realty Trust, Inc. (NYSE:DLR). All of these stocks’ market caps match EPD’s market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PUK,5,9403,-1 AEP,34,753751,-4 DD,64,3509743,10 KHC,35,10727266,-4 SMFG,10,101369,0 DXCM,55,1710751,-3 DLR,26,274088,-3 Average,32.7,2440910,-0.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.7 hedge funds with bullish positions and the average amount invested in these stocks was $2441 million. That figure was $222 million in EPD’s case. DuPont de Nemours Inc (NYSE:DD) is the most popular stock in this table. On the other hand Prudential Public Limited Company (NYSE:PUK) is the least popular one with only 5 bullish hedge fund positions. Enterprise Products Partners L.P. (NYSE:EPD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EPD is 60.2. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately EPD wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); EPD investors were disappointed as the stock returned -3.4% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Get real-time email alerts: Follow Enterprise Products Partners L.p. (NYSE:EPD)
Disclosure: None. This article was originally published at Insider Monkey.
Ex-Sanders staffers promote Biden to Latinos in Iowa, Nevada
WILMINGTON, Del. (AP) — Former staffers from Bernie Sanders’ presidential campaign want to harness strong support for the Vermont senator among Hispanics to bolster Joe Biden in two battleground states that could prove critical in November’s election.
Nuestro PAC is launching a 30-second spot that will begin airing Thursday for two weeks in heavily Hispanic Nevada and in Iowa, another state where the growing Latino population is largely overlooked. Backed by a six-figure ad buy, the spot features Hispanic staffers of Sanders’ campaign saying they worked hard for him during the Democratic primary, “But now, we’re all for Joe Biden, because Biden’s endorsed by Bernie.”
“We’re going to go into states where Bernie just dominated the Latino vote to help lift up Biden,” said the group’s founder, Chuck Rocha, who headed the Sanders campaign’s Hispanic outreach. “In Iowa, going to Latinos will surprise people … but they’re there, and we won them by huge margins. And the opposite side of that equation is going into Nevada to shore him up with young Latinos.”
The Biden campaign has acknowledged that its standing with Latinos could use improvement and tried to build a coalition of 20-plus voting blocs to mitigate that — including seniors, Native Americans and another group that strongly supported Sanders during the primary, progressives.
On Tuesday, Biden’s campaign unveiled its own ads in English and Spanish highlighting the Latino community. They are airing on television and digitally in Arizona, Florida and Nevada. The ads are also appearing in other states where Latino populations do not get a lot of attention but could play decisive roles at the ballot box — Minnesota, North Carolina, Pennsylvania, and Wisconsin.
Another onetime Biden primary rival, former New York Mayor Mike Bloomberg, has announced $100 million in investment in the swing state of Florida on Biden’s behalf, after a recent poll showed Biden garnering less support among Latinos there than Hillary Clinton did at the same point in 2016.
Rocha’s organization is instead betting on Sanders’ appeal in areas where Latinos backed him the past. He easily won Nevada during the primary and effectively mobilized Iowa’s small but growing Latino population to succeed in its caucus.
That may counter the Trump campaign’s efforts to bolster its national outreach to Latinos, especially men. While campaigning Friday in Florida, Trump said, “Biden betrayed Hispanic Americans.” He did not elaborate. The president has also visited Iowa and Nevada in recent weeks, something Biden has not done since the primary.
Sanders is a fierce critic of super PACs. But Nuestro PAC is teaming with the America’s Progressive Promise, run by Jeff Weaver and other former top strategists from Sander’s presidential campaign, to produce the spot.
“I think 2016 showed us, especially with states like Pennsylvania, Michigan and Wisconsin, that a lot of these minority communities — like Latinos and African American communities — can also be the margin of victory,” said Eileen Garcia, who was national surrogate communications coordinator for Sanders’ presidential campaign and is one of the ex-staffers featured in the ad that begins airing Thursday.
The title “Tio,” which translates to “Uncle,” is a play on the nickname some Hispanic supporters bestowed on Sanders during the primary. The ad will air only on digital media. Nuestro PAC says that’s because Latino voters tend not to watch network TV at high rates.
The groups have teamed up for previous ads. One that decried Trump’s handling of the coronavirus pandemic targeted several states, including Michigan and North Carolina.
“Everyone is starting to realize that this untapped community has a lot of potential,” Garcia said, “if you just put in the resources to talk to them.”
Kelly Clarkson Sued by Management Firm for Unpaid Commissions
Kelly Clarkson’s longtime management company filed a lawsuit on Tuesday claiming it’s owed $1.4 million in unpaid commissions.
Starstruck Management Group, run by Narvel Blackstock, filed the claim in Los Angeles Superior Court. Clarkson married Blackstock’s son, Brandon Blackstock, in 2013, and filed for divorce earlier this year. The couple has two children together.
According to the complaint, Clarkson has not paid the full commission this year for her work on “The Voice” and “The Kelly Clarkson Show,” her syndicated talk show.
The company has represented Clarkson for the last 13 years, and was paid a 15% commission on her gross earnings. The suit states that Clarkson has paid the firm $1.9 million this year, but owes another $1.4 million.
The suit also claims that Clarkson will owe at least $5.4 million by the end of the year.
It does not appear that Clarkson and Starstruck have a written management agreement. The suit alleges that the terms of the deal were verbally negotiated by Clarkson’s attorney and business manager in 2007, and that Clarkson confirmed the deal in a phone call.
Since then, the firm has been paid regular commissions in accordance with the terms, according to the complaint.
“Over the course of approximately 13 years, Starstruck developed Clarkson into a mega superstar,” the complaint states. “By way of example only, Starstruck was instrumental in helping Clarkson achieve success in terms of numerous hit albums, multiple Grammy wins and nominations, her role on popular television shows like ‘The Voice’ and her own talk show. Despite Starstruck’s hard work and dedication, Clarkson has decided she is going to stop paying Starstruck for what is contractually owed.”
The suit alleges a breach of oral contract, and seeks declaratory relief and an accounting. Starstruck is represented by Bryan J. Freedman of Freedman & Taitelman LLP.
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2 “Strong Buy” Space Stocks That Are Ready for Takeoff
Space, the final frontier. Throughout history, the expanse that exists beyond Earth has captivated people all over the world, with space exploration continuing to take giant leaps forward since Apollo 11 first landed on the moon.Now, outer space has peaked Wall Street’s interest. Given the high levels of private funding and advances in technology, the pros argue there could be major implications should space become more accessible and less expensive to reach. To this end, new markets such as satellite broadband, high-speed product delivery, reusable rockets and human space travel are emerging.Speaking to the potential opportunity, according to a recent KPMG report, by 2030, the global space industry could reach $600 billion, with it currently worth $350 billion. Bearing this in mind, we used TipRanks’ database to zero in on two space stocks reaching for the stars, so says the Street. Boasting the analyst community’s full support, both tickers have received a “Strong Buy” consensus rating. Virgin Galactic Holdings (SPCE)By offering high-speed point-to-point travel, Virgin Galactic wants to commercialize space travel and revolutionize commercial flight. Given the significant backlog of demand for commercial spaceflight, several members of the Street have high hopes for this space stock.Representing Cowen, analyst Oliver Chen sees SPCE as “uniquely positioned to benefit from the growing consumer interest toward luxury experiences, especially among high-net-worth individuals.” He added, “We believe a substantial growth opportunity lies ahead with the commercial spaceflight business, which already has ~600 reservations, and the development of high-speed point-to-point travel.”Looking at the market opportunity, Chen estimates that this part of the business could push SPCE’s top-line to $1 billion-plus by 2030, growing at a 60%-plus CAGR (2021-2030), with an EBITDA margin of 46%. According to the analyst, there’s a total addressable market (TAM) for commercial spaceflight (suborbital) of roughly 2.4 million individuals with a net worth of $5 million-plus globally.On top of this, SPCE could use its technology to develop additional revenue streams such as high-speed P2P commercial air travel. The development of hypersonic aircrafts would make 85% of the global network pairs accessible in a one-day trip. In addition, the analyst thinks the high-speed P2P opportunity could yield a TAM of $985 billion by 2050, and SPCE’s market share could clock in at 20%. “P2P is in very early innings but we believe the company has the resources, capital, and experience to pursue this business line,” Chen noted.Given that the company’s leadership team brings expertise from NASA and Disney to the table, Chen argues SPCE is capable of capitalizing on the opportunity, with solid execution potentially solidifying its status as an experiential luxury brand.The positioning of its commercial space flight offering as a luxury airline experience, which is what consumers are more used to, is likely to give SPCE the first-mover advantage over others like Blue Origin. “Given the high fixed cost of operating a space tourism operation, first-mover advantage looks critical to success; and VG appears better positioned than BO to get it,” Chen mentioned.What else could give SPCE the first-mover advantage? Chen points to SPCE’s 10-plus years of technology developed with $1 billion of investment made to-date and the vertically integrated aerospace development capabilities. What’s more, SPCE has “created competitive moats in a high-barrier-to-entry industry and benefits from strong consumer demand, which should support a premium pricing structure.”Based on all of the above, Chen puts an Outperform (i.e. Buy) rating and $22 price target on the stock. (To watch Chen’s track record, click here)Are other analysts in agreement? They are. Only Buy ratings, 7 to be exact, have been issued in the last three months. Therefore, the message is clear: SPCE is a Strong Buy. With a $25.43 average price target, shares could rise 22% in the next year. (See Virgin Galactic stock analysis on TipRanks)Aerojet Rocketdyne Holdings (AJRD)Serving customers that include the U.S. Department of Defense (DoD), NASA and other agencies and companies, Aerojet Rocketdyne develops and manufactures advanced propulsion and energetics systems. Given its recent contract awards, multiple analysts believe this company’s long-term growth prospects are strong.5-star analyst Ken Herbert, of Canaccord Genuity, recently met with AJRD’s new CFO, coming away from the discussion with his bullish thesis very much intact. The company expects the space business, which makes up 40% of sales, to be flat to up slightly, due to the recent SLS RS-25 engine order, with the core defense business (60% of sales) set to see steady growth.“While near-term margin upside is limited, we believe the revenue visibility, strong balance sheet and incremental opportunities in both space and defense contribute to a scarcity value for AJRD not reflected in the stock,” Herbert commented.That said, new programs are an essential piece of the puzzle here. Earlier in September, AJRD announced that it will build two elements of the new ground based strategic deterrent (GBSD) nuclear missiles for Northrop Grumman, which received a $13.3 billion, 8.5-year EMD contract to initiate early production of the “Minuteman IV” platform. AJRD is responsible for manufacturing a large solid rocket motor for the missile’s upper stage and the post-boost propulsion system needed to guide the nuclear warheads to their targets through apogee (the highest point of their parabolic flight arc). Weighing in on the deal, Herbert commented, “The program is expected to be substantial to both Aerojet and Northrop, with 400 active and 242 spare ICBMs expected to occupy the existing launch sites in the American West. It has been estimated that the GBSD program will be worth $63 billion during its first 20 years of life, which is likely to be extended given the longevity of the current Minuteman III deterrent.”Adding to the good news, AJRD’s backlog has increased to a record high of $6.8 billion as of Q2 2020, a 48% gain from the prior-year quarter. According to Herbert, a key driver of this growth has been the $1.8 billion NASA contract to construct 18 new RS-25 engines to support at least five additional Artemis lunar missions beyond the three currently planned. “As such, visibility into Aerojet’s business with NASA continues to look promising through 2030. Aerojet has also continued to see backlog growth on THAAD, hypersonics, Standard Missile and GMLRS,” the analyst stated. If that wasn’t enough, Herbert believes missile defense and classified hypersonics programs are likely to see solid backlog growth in the near-term.On top of this, in August, the U.S. Air Force awarded two contracts for the National Security Space Launch (NSSL) program to ULA (a Boeing and Lockheed joint venture) and SpaceX. The implication? “Aerojet Rocketdyne is seen as a winner of the contact outcome, which ensured that the company will continue to provide content on a majority of U.S. military and intelligence launches. AJRD will see its upper stage engine content double on the new ULA Vulcan rocket under this contract, which utilizes a new Centaur upper stage (the Centaur V) powered by two RL10 engines, as opposed to one RL10 on the legacy Atlas V rocket,” Herbert explained.Everything that AJRD has going for it convinced Herbert to reiterate his Buy rating. Along with the call, he maintained a $54 price target, suggesting 34% upside potential. (To watch Herbert’s track record, click here)All in all, other analysts are on the same page. AJRD’s Strong Buy consensus rating breaks down into 3 Buys and no Holds or Sells. Meanwhile, the $56 average price target brings the upside potential to 39%. (See AJRD stock analysis on TipRanks)To find good ideas for stocks trading at attractive valuations, visit TipRanks’ Best Stocks to Buy, a newly launched tool that unites all of TipRanks’ equity insights.Disclaimer: The opinions expressed in this article are solely those of the featured analysts. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.
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