Is Evercore Inc. (NYSE:EVR) 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 Evercore Inc. (NYSE:EVR) a safe stock to buy now? The best stock pickers are in a bullish mood. The number of bullish hedge fund positions improved by 3 recently. Our calculations also showed that EVR isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). EVR was in 29 hedge funds' portfolios at the end of September. There were 26 hedge funds in our database with EVR 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.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_25857" align="aligncenter" width="359"] George Soros of Soros Fund Management[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's analyze the key hedge fund action encompassing Evercore Inc. (NYSE:EVR).
What have hedge funds been doing with Evercore Inc. (NYSE:EVR)?
At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards EVR over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Evercore Inc. (NYSE:EVR) was held by Citadel Investment Group, which reported holding $102.4 million worth of stock at the end of September. It was followed by Millennium Management with a $78.9 million position. Other investors bullish on the company included Point72 Asset Management, GLG Partners, and Fisher Asset Management. In terms of the portfolio weights assigned to each position Azora Capital allocated the biggest weight to Evercore Partners Inc. (NYSE:EVR), around 1.07% of its portfolio. Buckingham Capital Management is also relatively very bullish on the stock, earmarking 0.57 percent of its 13F equity portfolio to EVR.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Royce & Associates, managed by Chuck Royce, created the biggest position in Evercore Inc. (NYSE:EVR). Royce & Associates had $9.1 million invested in the company at the end of the quarter. Gregg Moskowitz's Interval Partners also made a $3.8 million investment in the stock during the quarter. The other funds with new positions in the stock are George Soros's Soros Fund Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Benjamin A. Smith's Laurion Capital Management.
Let's now take a look at hedge fund activity in other stocks similar to Evercore Inc. (NYSE:EVR). We will take a look at RH (NYSE:RH), Brookfield Business Partners L.P. (NYSE:BBU), Community Bank System, Inc. (NYSE:CBU), and Watts Water Technologies Inc (NYSE:WTS). This group of stocks' market caps resemble EVR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RH,32,876978,4 BBU,6,10495,1 CBU,13,23777,1 WTS,22,266224,7 Average,18.25,294369,3.25 [/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 $294 million. That figure was $340 million in EVR's case. RH (NYSE:RH) is the most popular stock in this table. On the other hand Brookfield Business Partners L.P. (NYSE:BBU) is the least popular one with only 6 bullish hedge fund positions. Evercore Inc. (NYSE:EVR) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately EVR wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EVR were disappointed as the stock returned -2.7% during the fourth quarter (through the end of November) 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.
Disclosure: None. This article was originally published at Insider Monkey.