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Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks aren't doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to EVO Payments, Inc. (NASDAQ:EVOP) changed recently.
Is EVOP a good stock to buy now? EVO Payments, Inc. (NASDAQ:EVOP) investors should be aware of an increase in enthusiasm from smart money lately. EVO Payments, Inc. (NASDAQ:EVOP) was in 15 hedge funds' portfolios at the end of September. The all time high for this statistic is 22. Our calculations also showed that EVOP isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let's review the recent hedge fund action encompassing EVO Payments, Inc. (NASDAQ:EVOP).
Do Hedge Funds Think EVOP Is A Good Stock To Buy Now?
At third quarter's end, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 7% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in EVOP 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.
The largest stake in EVO Payments, Inc. (NASDAQ:EVOP) was held by Greenhouse Funds, which reported holding $10 million worth of stock at the end of September. It was followed by Islet Management with a $8.4 million position. Other investors bullish on the company included Marshall Wace LLP, Renaissance Technologies, and D E Shaw. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to EVO Payments, Inc. (NASDAQ:EVOP), around 1.53% of its 13F portfolio. Islet Management is also relatively very bullish on the stock, earmarking 0.58 percent of its 13F equity portfolio to EVOP.
With a general bullishness amongst the heavyweights, some big names have jumped into EVO Payments, Inc. (NASDAQ:EVOP) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in EVO Payments, Inc. (NASDAQ:EVOP). Marshall Wace LLP had $4.3 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also initiated a $0.8 million position during the quarter. The other funds with brand new EVOP positions are Michael Gelband's ExodusPoint Capital and Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as EVO Payments, Inc. (NASDAQ:EVOP) but similarly valued. We will take a look at Brooge Energy Limited (NASDAQ:BROG), GMS Inc. (NYSE:GMS), US Ecology Inc. (NASDAQ:ECOL), AudioCodes Ltd. (NASDAQ:AUDC), Regenxbio Inc (NASDAQ:RGNX), Live Oak Bancshares Inc (NASDAQ:LOB), and Universal Corp (NYSE:UVV). All of these stocks' market caps are similar to EVOP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BROG,6,35733,0 GMS,18,99280,1 ECOL,12,25411,-4 AUDC,9,25983,-3 RGNX,22,144111,-1 LOB,10,40785,0 UVV,12,74834,-1 Average,12.7,63734,-1.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.7 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $35 million in EVOP's case. Regenxbio Inc (NASDAQ:RGNX) is the most popular stock in this table. On the other hand Brooge Energy Limited (NASDAQ:BROG) is the least popular one with only 6 bullish hedge fund positions. EVO Payments, Inc. (NASDAQ:EVOP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EVOP is 54.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately EVOP wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EVOP were disappointed as the stock returned 2.1% since the end of September (through 12/14) 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 so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.