Is Evogene Ltd. (NASDAQ:EVGN) 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.
Evogene Ltd. (NASDAQ:EVGN) was in 3 hedge funds' portfolios at the end of September. EVGN investors should be aware of an increase in support from the world's most elite money managers recently. There were 2 hedge funds in our database with EVGN positions at the end of the previous quarter. Our calculations also showed that EVGN 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.
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' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_26340" align="aligncenter" width="467"] Ken Griffin of Citadel Investment Group[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. 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 even check out this option genius' weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager's investor letter and the stock already gained 20 percent. With all of this in mind let's review the latest hedge fund action encompassing Evogene Ltd. (NASDAQ:EVGN).
What does smart money think about Evogene Ltd. (NASDAQ:EVGN)?
At Q3's end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EVGN over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Evogene Ltd. (NASDAQ:EVGN) was held by Rima Senvest Management, which reported holding $0.7 million worth of stock at the end of September. It was followed by Moon Capital with a $0.6 million position. The only other hedge fund that is bullish on the company was Citadel Investment Group.
As industrywide interest jumped, key money managers were leading the bulls' herd. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in Evogene Ltd. (NASDAQ:EVGN). Citadel Investment Group had $0 million invested in the company at the end of the quarter.
Let's now review hedge fund activity in other stocks similar to Evogene Ltd. (NASDAQ:EVGN). We will take a look at Salem Media Group, Inc. (NASDAQ:SALM), HyreCar Inc. (NASDAQ:HYRE), Issuer Direct Corporation (NYSE:ISDR), and Kingold Jewelry Inc., (NASDAQ:KGJI). This group of stocks' market values match EVGN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SALM,4,1993,-1 HYRE,7,5406,4 ISDR,1,1219,-1 KGJI,1,7,0 Average,3.25,2156,0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 3.25 hedge funds with bullish positions and the average amount invested in these stocks was $2 million. That figure was $1 million in EVGN's case. HyreCar Inc. (NASDAQ:HYRE) is the most popular stock in this table. On the other hand Issuer Direct Corporation (NYSE:ISDR) is the least popular one with only 1 bullish hedge fund positions. Evogene Ltd. (NASDAQ:EVGN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 EVGN wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EVGN investors were disappointed as the stock returned -13.9% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.