One of the great maxims of traders and Wall Street pros is to follow the "smart money."

I'm not much for the thesis that institutional shoppers tend to make smarter investing decisions, but many of you who've read my ruminations on insider buying say you'd also like to know how the Big Money is betting. Your wish is my command.

Next up: EnerNOC (Nasdaq: ENOC). Are institutions bullish or bearish when it comes to this provider of energy management technology?

Foolish facts



CAPS stars (out of 5) ****
Total ratings 623
Percent bulls 94.4%
Percent bears 5.6%
Bullish pitches 60 out of 66

Data current as of March 20.

No one wants to talk about smart energy management in times like these. Sadly, we have to. There's no escaping the political reality that, for as much as the green movement wants to put an end to coal-fired and nuclear plants, solar isn't ready to satisfy the large and growing appetite for the world's major electric grids in a cost-effective way. Carefully managing what we have is, well, all we have.

Enter EnerNOC. The company's demand response technology allows clients to monitor power usage and opt out of the grid during times of peak demand. Clients save money while utilities suffer less network stress. Everyone wins.

Or do they? PJM, the controlling entity for the Eastern Seaboard's power grid, last month said that demand response technology providers were double-counting and therefore inaccurately representing how much power clients were saving. The Federal Energy Regulatory Commission has since ruled that no issue exists. Regardless, shares of EnerNOC remain down more than 23% since late December.

Some Fools see that as a bargain-hunting opportunity. In particular, my colleagues Dan Dzombak and Alyce Lomax have added shares of EnerNOC to their Rising Star portfolios. Both see the company's bulked-up balance sheet as rocket fuel for a growth story that has yet to clear the atmosphere.

I'm inclined to agree. Say what you will about the company's lofty earnings multiple, Wall Street expects EnerNOC to more than double profits over the next two years. Growth rarely gets more outrageous.

But is it quality growth? By the numbers, yes: EnerNOC's returns on capital have risen steadily since 2006. Cash flow from operations quintupled last year. And while gross margin fell slightly to 43.5% in 2010 from 46% the year prior, that's still well above 2006 levels. All signs point toward an improving business.

Institutional ownership history

Top Owners





BlackRock 117,902 866,100 1,408,016 1,408,016
Foundation Capital 2,881,361 1,934,093 1,269,259 1,269,259
Waddell & Reed Investment Mgmt. - 1,186,100 1,245,700 1,245,700
Draper Fisher Jurvetson 2,084,240 1,618,722 1,210,476 1,210,476
T. Rowe Price Group 1,107,970 1,507,212 1,151,655 1,151,655
TOP 25 TOTAL 8,634,992 11,955,477 15,365,883 15,365,883

Source: Capital IQ, a division of Standard & Poor's. *Indicates the number of shares owned.

Big Money would appear to agree. Not only have they increased buying on an annual basis, but institutions have also added to their positions in each of the past five quarters. Combined, BlackRock and Putnam purchased nearly 1 million EnerNOC shares in the December quarter.

Among mutual fund investors, the highly rated Putnam Voyager (PVOYX) fund opened a new position during the December quarter. Michael Lippert's Baron Opportunity (BIOPX) fund boosted its stake in EnerNOC by 11.1% over the same period. T. Rowe Price's New Horizons (PRNHX) fund, long a paragon for growth investors, remained the top institutional owner of the stock as of Dec. 31 despite trimming its stake during the quarter, Morningstar reports.

Competitor and peer checkup


Institutional Ownership

Insider Ownership

Comverge (Nasdaq: COMV) 73.92% 8.07%
EnerNOC 77.40% 13.05%
ESCO Technologies (NYSE: ESE) 98.71% 2.39%
Itron (Nasdaq: ITRI) 87.11% 1.11%

Source: Capital IQ. Data current as of March 21.

New Horizons' selling probably has as much to do with diversifying as anything else. Nothing in this table would indicate otherwise. EnerNOC's ownership profile is tops among peers. Insiders still own a large chunk of the company.

Combined, co-founders David Brewster and Tim Healy control 7.6% of the shares still outstanding. And that's important. As president and CEO, respectively, Brewster and Healy have their hands on the levers that create value for EnerNOC investors like themselves. I'm inclined to invest alongside them in my CAPS portfolio.

Do you agree? Disagree? Let me know you would rate EnerNOC using the comments box below. You can also recommend other stocks for me to evaluate by sending me an email, or replying to me on Twitter.

And in the meantime, keep tabs on EnerNOC by rating the stock in Motley Fool CAPS or adding it to Your Watchlist for free, personalized stock tracking.

EnerNOC is a Motley Fool Hidden Gems recommendation. Try any of our Foolish newsletter services free for 30 days.

Fool contributor Tim Beyers is a member of the Rule Breakers stock-picking team. He didn't own shares in any of the companies mentioned in this article at the time of publication. Check out Tim's portfolio holdings and Foolish writings, or connect with him on Twitter as @milehighfool. You can also get his insights delivered directly to your RSS reader. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool owns shares of EnerNOC and T. Rowe Price and is also on Twitter as @TheMotleyFool. Its disclosure policy is smarter than the average bear.