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Hedge Funds Are Coming Back To EQT Corporation (EQT)

Asma UL Husna
·6 mins read

The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought EQT Corporation (NYSE:EQT) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.

EQT Corporation (NYSE:EQT) investors should be aware of an increase in hedge fund interest in recent months. EQT Corporation (NYSE:EQT) was in 34 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 50. There were 30 hedge funds in our database with EQT holdings at the end of March. Our calculations also showed that EQT isn't among the 30 most popular stocks among hedge funds (click for Q2 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.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ken Griffin
Ken Griffin

Ken Griffin of Citadel Investment Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. Cannabis stocks are roaring back in 2020, which is why we are also checking out this under-the-radar stock. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We go through lists like the 10 most profitable companies in the world 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. Now we're going to take a peek at the fresh hedge fund action regarding EQT Corporation (NYSE:EQT).

How have hedgies been trading EQT Corporation (NYSE:EQT)?

At second quarter's end, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EQT over the last 20 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Citadel Investment Group held the most valuable stake in EQT Corporation (NYSE:EQT), which was worth $87 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $55.8 million worth of shares. Encompass Capital Advisors, Firefly Value Partners, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Quaker Capital Investments allocated the biggest weight to EQT Corporation (NYSE:EQT), around 8.3% of its 13F portfolio. Firefly Value Partners is also relatively very bullish on the stock, dishing out 6.72 percent of its 13F equity portfolio to EQT.

With a general bullishness amongst the heavyweights, some big names have jumped into EQT Corporation (NYSE:EQT) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the most outsized position in EQT Corporation (NYSE:EQT). Arrowstreet Capital had $55.8 million invested in the company at the end of the quarter. David Greenspan's Slate Path Capital also made a $19.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark G. Schoeppner's Quaker Capital Investments, Israel Englander's Millennium Management, and George McCabe's Portolan Capital Management.

Let's now review hedge fund activity in other stocks similar to EQT Corporation (NYSE:EQT). We will take a look at Bank OZK (NASDAQ:OZK), Foot Locker, Inc. (NYSE:FL), NovaGold Resources Inc. (NYSE:NG), UFP Industries, Inc. (NASDAQ:UFPI), Synovus Financial Corp. (NYSE:SNV), J2 Global Inc (NASDAQ:JCOM), and Sprouts Farmers Market Inc (NASDAQ:SFM). This group of stocks' market caps are similar to EQT's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OZK,17,160531,-8 FL,29,309984,8 NG,23,375744,4 UFPI,18,68772,1 SNV,27,185112,-6 JCOM,30,203643,9 SFM,25,467061,-5 Average,24.1,252978,0.4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $374 million in EQT's case. J2 Global Inc (NASDAQ:JCOM) is the most popular stock in this table. On the other hand Bank OZK (NASDAQ:OZK) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks EQT Corporation (NYSE:EQT) is more popular among hedge funds. Our overall hedge fund sentiment score for EQT is 79.4. 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. 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 returned 33% in 2020 through the end of August but still managed to beat the market by 23.2 percentage points. Hedge funds were also right about betting on EQT as the stock returned 33.4% since the end of June 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.

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

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