Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of EverQuote, Inc. (NASDAQ:EVER) based on that data and determine whether they were really smart about the stock.
EverQuote, Inc. (NASDAQ:EVER) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 23 hedge funds' portfolios at the end of June. Our calculations also showed that EVER 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). The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as 360 DigiTech, Inc. (NASDAQ:QFIN), Noah Holdings Limited (NYSE:NOAH), and Otter Tail Corporation (NASDAQ:OTTR) to gather more data points. Our calculations also showed that EVER 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 56 percentage points since March 2017 (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 34% through August 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Donald Sussman of Paloma Partners
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this lithium company which could also benefit from the electric car adoption. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. Keeping this in mind let's take a glance at the key hedge fund action encompassing EverQuote, Inc. (NASDAQ:EVER).
What does smart money think about EverQuote, Inc. (NASDAQ:EVER)?
At the end of June, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EVER over the last 20 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 EverQuote, Inc. (NASDAQ:EVER) was held by Renaissance Technologies, which reported holding $62.2 million worth of stock at the end of September. It was followed by Zevenbergen Capital Investments with a $42.4 million position. Other investors bullish on the company included D E Shaw, G2 Investment Partners Management, and Driehaus Capital. In terms of the portfolio weights assigned to each position G2 Investment Partners Management allocated the biggest weight to EverQuote, Inc. (NASDAQ:EVER), around 6.55% of its 13F portfolio. Shannon River Fund Management is also relatively very bullish on the stock, setting aside 3.17 percent of its 13F equity portfolio to EVER.
Seeing as EverQuote, Inc. (NASDAQ:EVER) has faced falling interest from the aggregate hedge fund industry, it's easy to see that there lies a certain "tier" of money managers who were dropping their positions entirely heading into Q3. It's worth mentioning that Mark Coe's Intrinsic Edge Capital dumped the largest position of the "upper crust" of funds watched by Insider Monkey, comprising about $2.6 million in stock, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors was right behind this move, as the fund said goodbye to about $0.6 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks similar to EverQuote, Inc. (NASDAQ:EVER). We will take a look at 360 DigiTech, Inc. (NASDAQ:QFIN), Noah Holdings Limited (NYSE:NOAH), Otter Tail Corporation (NASDAQ:OTTR), Retail Properties of America Inc (NYSE:RPAI), B&G Foods, Inc. (NYSE:BGS), SITE Centers Corp. (NYSE:SITC), and RLJ Lodging Trust (NYSE:RLJ). All of these stocks' market caps match EVER's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QFIN,12,64598,9 NOAH,18,335783,4 OTTR,12,57260,0 RPAI,11,83957,-9 BGS,13,62313,0 SITC,15,73788,-6 RLJ,18,76180,-2 Average,14.1,107697,-0.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $272 million in EVER's case. Noah Holdings Limited (NYSE:NOAH) is the most popular stock in this table. On the other hand Retail Properties of America Inc (NYSE:RPAI) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks EverQuote, Inc. (NASDAQ:EVER) is more popular among hedge funds. Our overall hedge fund sentiment score for EVER is 85. 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 gained 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. Unfortunately EVER wasn't nearly as popular as these 10 stocks and hedge funds that were betting on EVER were disappointed as the stock returned -33.6% 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.