The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtEuronet Worldwide, Inc. (NASDAQ:EEFT) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Euronet Worldwide, Inc. (NASDAQ:EEFT) investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. Our calculations also showed that EEFT isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). 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 58 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.
[caption id="attachment_845793" align="aligncenter" width="400"] Peter Rathjens of Arrowstreet Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Now let's go over the key hedge fund action regarding Euronet Worldwide, Inc. (NASDAQ:EEFT).
Hedge fund activity in Euronet Worldwide, Inc. (NASDAQ:EEFT)
Heading into the second quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -36% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards EEFT over the last 18 quarters. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
The largest stake in Euronet Worldwide, Inc. (NASDAQ:EEFT) was held by Citadel Investment Group, which reported holding $63.4 million worth of stock at the end of September. It was followed by Steamboat Capital Partners with a $29.4 million position. Other investors bullish on the company included Renaissance Technologies, QVT Financial, and Crosslink Capital. In terms of the portfolio weights assigned to each position Steamboat Capital Partners allocated the biggest weight to Euronet Worldwide, Inc. (NASDAQ:EEFT), around 5.78% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, setting aside 4.45 percent of its 13F equity portfolio to EEFT.
Due to the fact that Euronet Worldwide, Inc. (NASDAQ:EEFT) has witnessed bearish sentiment from hedge fund managers, it's safe to say that there exists a select few hedgies who sold off their full holdings by the end of the first quarter. At the top of the heap, George McCabe's Portolan Capital Management dumped the biggest position of all the hedgies followed by Insider Monkey, valued at about $26 million in stock, and Joe Milano's Greenhouse Funds was right behind this move, as the fund dropped about $14.9 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 17 funds by the end of the first quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Euronet Worldwide, Inc. (NASDAQ:EEFT) but similarly valued. We will take a look at Enel Chile S.A. (NYSE:ENIC), Forty Seven, Inc. (NASDAQ:FTSV), Sensata Technologies Holding plc (NYSE:ST), and Prosperity Bancshares, Inc. (NYSE:PB). This group of stocks' market valuations resemble EEFT's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ENIC,8,17690,2 FTSV,40,1084502,22 ST,26,699556,3 PB,16,81448,-6 Average,22.5,470799,5.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $471 million. That figure was $240 million in EEFT's case. Forty Seven, Inc. (NASDAQ:FTSV) is the most popular stock in this table. On the other hand Enel Chile S.A. (NYSE:ENIC) is the least popular one with only 8 bullish hedge fund positions. Euronet Worldwide, Inc. (NASDAQ:EEFT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately EEFT wasn't nearly as popular as these 10 stocks and hedge funds that were betting on EEFT were disappointed as the stock returned 11.8% during the same time period 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.