We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 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 Emerald Expositions Events, Inc. (NYSE:EEX).
Emerald Expositions Events, Inc. (NYSE:EEX) was in 7 hedge funds' portfolios at the end of June. EEX has experienced an increase in hedge fund sentiment of late. There were 6 hedge funds in our database with EEX positions at the end of the previous quarter. Our calculations also showed that EEX 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.
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 glance at the new hedge fund action encompassing Emerald Expositions Events, Inc. (NYSE:EEX).
Hedge fund activity in Emerald Expositions Events, Inc. (NYSE:EEX)
At the end of the second quarter, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EEX over the last 16 quarters. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
The largest stake in Emerald Expositions Events, Inc. (NYSE:EEX) was held by D E Shaw, which reported holding $1.2 million worth of stock at the end of March. It was followed by Millennium Management with a $1 million position. Other investors bullish on the company included Select Equity Group, Citadel Investment Group, and Two Sigma Advisors.
Now, some big names were breaking ground themselves. Millennium Management, managed by Israel Englander, initiated the most outsized position in Emerald Expositions Events, Inc. (NYSE:EEX). Millennium Management had $1 million invested in the company at the end of the quarter. Robert Joseph Caruso's Select Equity Group also made a $0.9 million investment in the stock during the quarter.
Let's go over hedge fund activity in other stocks similar to Emerald Expositions Events, Inc. (NYSE:EEX). These stocks are Quanterix Corporation (NASDAQ:QTRX), Lakeland Bancorp, Inc. (NASDAQ:LBAI), HomeStreet Inc (NASDAQ:HMST), and Delek Logistics Partners LP (NYSE:DKL). This group of stocks' market valuations are similar to EEX's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QTRX,8,37926,1 LBAI,11,52691,-1 HMST,9,17189,-1 DKL,1,2994,0 Average,7.25,27700,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $28 million. That figure was $5 million in EEX's case. Lakeland Bancorp, Inc. (NASDAQ:LBAI) is the most popular stock in this table. On the other hand Delek Logistics Partners LP (NYSE:DKL) is the least popular one with only 1 bullish hedge fund positions. Emerald Expositions Events, Inc. (NYSE:EEX) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately EEX wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EEX investors were disappointed as the stock returned -12% 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 so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.