Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Enviva Partners, LP (NYSE:EVA).
Enviva Partners, LP (NYSE:EVA) was in 6 hedge funds' portfolios at the end of September. The all time high for this statistics is 8. EVA investors should be aware of a decrease in hedge fund sentiment in recent months. There were 8 hedge funds in our database with EVA holdings at the end of June. Our calculations also showed that EVA isn't among the 30 most popular stocks among hedge funds (click for Q3 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 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 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Matthew Drapkin of Becker Drapkin Management
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 real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Now we're going to check out the recent hedge fund action regarding Enviva Partners, LP (NYSE:EVA).
Hedge fund activity in Enviva Partners, LP (NYSE:EVA)
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the second quarter of 2020. By comparison, 5 hedge funds held shares or bullish call options in EVA a year ago. With the smart money's positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions)..
When looking at the institutional investors followed by Insider Monkey, Philip Hempleman's Ardsley Partners has the biggest position in Enviva Partners, LP (NYSE:EVA), worth close to $19.8 million, comprising 3.8% of its total 13F portfolio. The second largest stake is held by Becker Drapkin Management, managed by Matthew Drapkin and Steven R. Becker, which holds a $7.9 million position; 4.1% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism encompass Kenneth Squire's 13D Management, Paul Marshall and Ian Wace's Marshall Wace LLP and Mark McMeans's Brasada Capital Management. In terms of the portfolio weights assigned to each position Becker Drapkin Management allocated the biggest weight to Enviva Partners, LP (NYSE:EVA), around 4.15% of its 13F portfolio. Ardsley Partners is also relatively very bullish on the stock, dishing out 3.82 percent of its 13F equity portfolio to EVA.
Since Enviva Partners, LP (NYSE:EVA) has experienced bearish sentiment from the aggregate hedge fund industry, we can see that there exists a select few funds that elected to cut their full holdings by the end of the third quarter. Intriguingly, Jeffrey Ubben's ValueAct Capital cut the biggest position of the 750 funds monitored by Insider Monkey, comprising close to $174.2 million in stock, and Christian Leone's Luxor Capital Group was right behind this move, as the fund sold off about $8.6 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks similar to Enviva Partners, LP (NYSE:EVA). These stocks are Albany International Corp. (NYSE:AIN), Vital Farms, Inc. (NASDAQ:VITL), ChampionX Corporation (NYSE:CHX), PennyMac Mortgage Investment Trust (NYSE:PMT), Cooper Tire & Rubber Company (NYSE:CTB), Ameresco Inc (NYSE:AMRC), and Cedar Fair, L.P. (NYSE:FUN). This group of stocks' market caps match EVA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AIN,17,46431,-2 VITL,11,58142,11 CHX,27,383178,-3 PMT,19,56218,4 CTB,23,161958,5 AMRC,8,56869,-5 FUN,13,112538,-1 Average,16.9,125048,1.3 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $44 million in EVA's case. ChampionX Corporation (NYSE:CHX) is the most popular stock in this table. On the other hand Ameresco Inc (NYSE:AMRC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Enviva Partners, LP (NYSE:EVA) is even less popular than AMRC. Our overall hedge fund sentiment score for EVA is 25.5. 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. Hedge funds clearly dropped the ball on EVA as the stock delivered strong returns, though hedge funds' consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on EVA as the stock returned 14.9% since Q3 (through November 27th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.