Is Everbridge, Inc. (NASDAQ:EVBG) 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.
Is Everbridge, Inc. (NASDAQ:EVBG) a healthy stock for your portfolio? The best stock pickers are getting less optimistic. The number of bullish hedge fund positions shrunk by 2 lately. Our calculations also showed that EVBG isn't among the 30 most popular stocks among hedge funds (view video below). EVBG was in 28 hedge funds' portfolios at the end of June. There were 30 hedge funds in our database with EVBG positions at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 40 percentage points since May 2014 through May 30, 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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to go over the latest hedge fund action regarding Everbridge, Inc. (NASDAQ:EVBG).
How are hedge funds trading Everbridge, Inc. (NASDAQ:EVBG)?
Heading into the third quarter of 2019, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -7% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EVBG over the last 16 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Everbridge, Inc. (NASDAQ:EVBG) was held by Select Equity Group, which reported holding $75.3 million worth of stock at the end of March. It was followed by Alkeon Capital Management with a $74.4 million position. Other investors bullish on the company included Sylebra Capital Management, Light Street Capital, and Driehaus Capital.
Since Everbridge, Inc. (NASDAQ:EVBG) has witnessed a decline in interest from the aggregate hedge fund industry, we can see that there lies a certain "tier" of funds that slashed their entire stakes by the end of the second quarter. At the top of the heap, Ken Griffin's Citadel Investment Group said goodbye to the biggest position of the 750 funds watched by Insider Monkey, totaling close to $4.7 million in stock. David Costen Haley's fund, HBK Investments, also sold off its stock, about $2.9 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds by the end of the second quarter.
Let's go over hedge fund activity in other stocks similar to Everbridge, Inc. (NASDAQ:EVBG). We will take a look at HMS Holdings Corp. (NASDAQ:HMSY), Houlihan Lokey Inc (NYSE:HLI), Rattler Midstream LP (NASDAQ:RTLR), and NIO Inc. (NYSE:NIO). All of these stocks' market caps resemble EVBG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HMSY,21,186302,-5 HLI,15,124317,1 RTLR,20,217080,20 NIO,14,147419,-7 Average,17.5,168780,2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $169 million. That figure was $537 million in EVBG's case. HMS Holdings Corp. (NASDAQ:HMSY) is the most popular stock in this table. On the other hand NIO Inc. (NYSE:NIO) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Everbridge, Inc. (NASDAQ:EVBG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately EVBG wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EVBG were disappointed as the stock returned -31% during the third quarter 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 many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.