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Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors' favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds' top consensus picks. This year hedge funds' top 20 stock picks outperformed the S&P 500 Index by 4 percentage points through September 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
EZCORP Inc (NASDAQ:EZPW) has experienced an increase in hedge fund interest recently. EZPW was in 21 hedge funds' portfolios at the end of June. There were 20 hedge funds in our database with EZPW positions at the end of the previous quarter. Our calculations also showed that EZPW isn't among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
At the moment there are dozens of signals market participants put to use to grade stocks. A pair of the less known signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the top investment managers can trounce the broader indices by a superb amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a look at the new hedge fund action regarding EZCORP Inc (NASDAQ:EZPW).
How are hedge funds trading EZCORP Inc (NASDAQ:EZPW)?
At Q2's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EZPW over the last 16 quarters. With the smart money's sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
Among these funds, Lafitte Capital Management held the most valuable stake in EZCORP Inc (NASDAQ:EZPW), which was worth $51.1 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $17 million worth of shares. Moreover, Archon Capital Management, Sabrepoint Capital, and Lonestar Capital Management were also bullish on EZCORP Inc (NASDAQ:EZPW), allocating a large percentage of their portfolios to this stock.
Consequently, key money managers have jumped into EZCORP Inc (NASDAQ:EZPW) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in EZCORP Inc (NASDAQ:EZPW). Marshall Wace LLP had $0.8 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also made a $0.3 million investment in the stock during the quarter. The only other fund with a brand new EZPW position is Mike Vranos's Ellington.
Let's also examine hedge fund activity in other stocks similar to EZCORP Inc (NASDAQ:EZPW). We will take a look at B. Riley Financial, Inc. (NASDAQ:RILY), Zix Corporation (NASDAQ:ZIXI), Cheetah Mobile Inc (NYSE:CMCM), and Ennis, Inc. (NYSE:EBF). This group of stocks' market values are similar to EZPW's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RILY,10,106495,0 ZIXI,14,74900,-7 CMCM,6,5545,2 EBF,12,68995,3 Average,10.5,63984,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $122 million in EZPW's case. Zix Corporation (NASDAQ:ZIXI) is the most popular stock in this table. On the other hand Cheetah Mobile Inc (NYSE:CMCM) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks EZCORP Inc (NASDAQ:EZPW) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately EZPW wasn't nearly as popular as these 20 stocks and hedge funds that were betting on EZPW were disappointed as the stock returned -31.8% during the third quarter 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 in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
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