We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds' top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like EverBank Financial Corp (NYSE:EVER).
EverBank Financial Corp (NYSE:EVER) was in 13 hedge funds' portfolios at the end of September. EVER investors should be aware of an increase in support from the world's most elite money managers lately. There were 11 hedge funds in our database with EVER positions at the end of the previous quarter. Our calculations also showed that EVER isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). 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 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_193003" align="alignnone" width="600"] Chuck Royce of Royce & Associates[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to go over the new hedge fund action regarding EverBank Financial Corp (NYSE:EVER).
What does smart money think about EverBank Financial Corp (NYSE:EVER)?
At the end of the third quarter, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. By comparison, 10 hedge funds held shares or bullish call options in EVER a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, G2 Investment Partners Management was the largest shareholder of EverBank Financial Corp (NYSE:EVER), with a stake worth $12.7 million reported as of the end of September. Trailing G2 Investment Partners Management was Royce & Associates, which amassed a stake valued at $9.8 million. Driehaus Capital, Renaissance Technologies, 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 G2 Investment Partners Management allocated the biggest weight to EverBank Financial Corp (NYSE:EVER), around 3.62% of its 13F portfolio. P.A.W. Capital Partners is also relatively very bullish on the stock, earmarking 2.74 percent of its 13F equity portfolio to EVER.
As one would reasonably expect, key money managers were leading the bulls' herd. Intrinsic Edge Capital, managed by Mark Coe, created the most valuable position in EverBank Financial Corp (NYSE:EVER). Intrinsic Edge Capital had $2.5 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $0.7 million investment in the stock during the quarter. The following funds were also among the new EVER investors: John Overdeck and David Siegel's Two Sigma Advisors and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as EverBank Financial Corp (NYSE:EVER) but similarly valued. These stocks are i3 Verticals, Inc. (NASDAQ:IIIV), Endurance International Group Holdings Inc (NASDAQ:EIGI), One Liberty Properties, Inc. (NYSE:OLP), and Catalyst Pharmaceuticals, Inc. (NASDAQ:CPRX). This group of stocks' market values match EVER's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position IIIV,10,48762,-3 EIGI,13,80023,2 OLP,5,30386,1 CPRX,12,124014,2 Average,10,70796,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $71 million. That figure was $63 million in EVER's case. Endurance International Group Holdings Inc (NASDAQ:EIGI) is the most popular stock in this table. On the other hand One Liberty Properties, Inc. (NYSE:OLP) is the least popular one with only 5 bullish hedge fund positions. EverBank Financial Corp (NYSE:EVER) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on EVER as the stock returned 65% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.