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Did Hedge Funds Drop The Ball On EZCORP Inc (EZPW) ?

Reymerlyn Martin

How do we determine whether EZCORP Inc (NASDAQ:EZPW) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.

EZCORP Inc (NASDAQ:EZPW) investors should be aware of an increase in support from the world's most elite money managers lately. Our calculations also showed that EZPW isn't among the 30 most popular stocks among hedge funds.

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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Jay Petschek - Corsair Capital

Let's take a glance at the key hedge fund action encompassing EZCORP Inc (NASDAQ:EZPW).

How are hedge funds trading EZCORP Inc (NASDAQ:EZPW)?

Heading into the first quarter of 2019, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in EZPW over the last 14 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

EZPW_may2019

Among these funds, Lafitte Capital Management held the most valuable stake in EZCORP Inc (NASDAQ:EZPW), which was worth $41.7 million at the end of the fourth quarter. On the second spot was Renaissance Technologies which amassed $10 million worth of shares. Moreover, Huber Capital Management, Archon Capital Management, and Cardinal Capital were also bullish on EZCORP Inc (NASDAQ:EZPW), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, specific money managers were breaking ground themselves. Springbok Capital, managed by Gavin Saitowitz and Cisco J. del Valle, established the most outsized position in EZCORP Inc (NASDAQ:EZPW). Springbok Capital had $2.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital also made a $0.1 million investment in the stock during the quarter. The following funds were also among the new EZPW investors: Jay Petschek and Steven Major's Corsair Capital Management and Paul Marshall and Ian Wace's Marshall Wace LLP.

Let's check out hedge fund activity in other stocks similar to EZCORP Inc (NASDAQ:EZPW). These stocks are Adams Natural Resources Fund, Inc. (NYSE:PEO), Hingham Institution for Savings (NASDAQ:HIFS), Fluidigm Corporation (NASDAQ:FLDM), and Attunity Ltd (NASDAQ:ATTU). This group of stocks' market valuations are similar to EZPW's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PEO,3,1894,1 HIFS,1,4627,0 FLDM,19,145319,7 ATTU,17,84857,4 Average,10,59174,3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $106 million in EZPW's case. Fluidigm Corporation (NASDAQ:FLDM) is the most popular stock in this table. On the other hand Hingham Institution for Savings (NASDAQ:HIFS) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks EZCORP Inc (NASDAQ:EZPW) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on EZPW as the stock returned 38.9% and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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