Is EVI Industries, Inc. (NYSE:EVI) a good bet right now? We like to analyze hedge fund sentiment before conducting days of in-depth research. We do so because hedge funds and other elite investors have numerous Ivy League graduates, expert network advisers, and supply chain tipsters working or consulting for them. There is not a shortage of news stories covering failed hedge fund investments and it is a fact that hedge funds' picks don't beat the market 100% of the time, but their consensus picks have historically done very well and have outperformed the market after adjusting for risk.
EVI Industries, Inc. (NYSE:EVI) has seen an increase in hedge fund sentiment of late. EVI was in 2 hedge funds' portfolios at the end of September. There was only 1 hedge fund in our database with EVI positions at the end of the previous quarter. Naturally our calculations also showed that EVI isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to 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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a gander at the latest hedge fund action encompassing EVI Industries, Inc. (NYSE:EVI).
What have hedge funds been doing with EVI Industries, Inc. (NYSE:EVI)?
Heading into the fourth quarter of 2019, a total of 2 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 100% from one quarter earlier. By comparison, 2 hedge funds held shares or bullish call options in EVI a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Adam Wyden's ADW Capital has the biggest position in EVI Industries, Inc. (NYSE:EVI), worth close to $32.1 million, corresponding to 34.8% of its total 13F portfolio. The second largest stake is held by Chuck Royce of Royce & Associates, with a $2.2 million position; less than 0.1%% of its 13F portfolio is allocated to the company.
There weren't any hedge funds initiating brand new positions in the stock during the third quarter. We started tracking ADW Capital during the third quarter which is why we observed an increase in the number of hedge funds with bullish EVI positions.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as EVI Industries, Inc. (NYSE:EVI) but similarly valued. We will take a look at Overstock.com, Inc. (NASDAQ:OSTK), VSE Corporation (NASDAQ:VSEC), Rite Aid Corporation (NYSE:RAD), and CONSOL Coal Resources LP (NYSE:CCR). All of these stocks' market caps are similar to EVI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OSTK,4,3762,-5 VSEC,4,1393,0 RAD,8,8650,-1 CCR,4,76134,0 Average,5,22485,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 5 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $34 million in EVI's case. Rite Aid Corporation (NYSE:RAD) is the most popular stock in this table. On the other hand Overstock.com, Inc. (NASDAQ:OSTK) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks EVI Industries, Inc. (NYSE:EVI) is even less popular than OSTK. Hedge funds dodged a bullet by taking a bearish stance towards EVI. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately EVI wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); EVI investors were disappointed as the stock returned -4.4% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.