At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Evercore Inc. (NYSE:EVR).
Evercore Inc. (NYSE:EVR) has seen a decrease in support from the world's most elite money managers in recent months. Our calculations also showed that EVR 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_745225" align="aligncenter" width="400"] Noam Gottesman of GLG Partners[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one as well as this tiny lithium play. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's review the key hedge fund action regarding Evercore Inc. (NYSE:EVR).
What have hedge funds been doing with Evercore Inc. (NYSE:EVR)?
At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EVR over the last 18 quarters. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in Evercore Inc. (NYSE:EVR). AQR Capital Management has a $34.7 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by GLG Partners, managed by Noam Gottesman, which holds a $25.3 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining members of the smart money with similar optimism include Chuck Royce's Royce & Associates, Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Kettle Hill Capital Management allocated the biggest weight to Evercore Inc. (NYSE:EVR), around 2.17% of its 13F portfolio. BlueMar Capital Management is also relatively very bullish on the stock, earmarking 1.41 percent of its 13F equity portfolio to EVR.
Judging by the fact that Evercore Inc. (NYSE:EVR) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there lies a certain "tier" of hedgies who were dropping their positions entirely in the first quarter. At the top of the heap, Donald Sussman's Paloma Partners said goodbye to the largest stake of the 750 funds followed by Insider Monkey, totaling close to $1.6 million in stock, and Michael Gelband's ExodusPoint Capital was right behind this move, as the fund cut about $0.9 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 3 funds in the first quarter.
Let's go over hedge fund activity in other stocks similar to Evercore Inc. (NYSE:EVR). We will take a look at Triton International Limited (NYSE:TRTN), Karuna Therapeutics, Inc. (NASDAQ:KRTX), Weingarten Realty Investors (NYSE:WRI), and Liberty Latin America Ltd. (NASDAQ:LILAK). This group of stocks' market values resemble EVR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRTN,12,26482,-4 KRTX,16,148161,1 WRI,20,72034,0 LILAK,25,257107,4 Average,18.25,125946,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $198 million in EVR's case. Liberty Latin America Ltd. (NASDAQ:LILAK) is the most popular stock in this table. On the other hand Triton International Limited (NYSE:TRTN) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Evercore Inc. (NYSE:EVR) is more popular among hedge funds. 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 8.3% in 2020 through the end of May but still managed to beat the market by 13.2 percentage points. Hedge funds were also right about betting on EVR, though not to the same extent, as the stock returned 20.8% in Q2 (through the end of May) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.