Was Smart Money Right About Crowding Into Everbridge, Inc. (EVBG)?
Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren't timid and registered double digit market beating gains. Financials, energy and industrial stocks aren't doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Everbridge, Inc. (NASDAQ:EVBG) changed recently.
Everbridge, Inc. (NASDAQ:EVBG) investors should pay attention to an increase in hedge fund sentiment lately. Everbridge, Inc. (NASDAQ:EVBG) was in 43 hedge funds' portfolios at the end of June. The all time high for this statistics is 37. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 31 hedge funds in our database with EVBG positions at the end of the first quarter. Our calculations also showed that EVBG 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Michael Gelband of ExodusPoint Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than quadrupled this year. We are trying to identify other EV revolution winners, so we are checking out this under-the-radar lithium stock. 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 latest hedge fund action surrounding Everbridge, Inc. (NASDAQ:EVBG).
What have hedge funds been doing with Everbridge, Inc. (NASDAQ:EVBG)?
At second quarter's end, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 39% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EVBG over the last 20 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Select Equity Group was the largest shareholder of Everbridge, Inc. (NASDAQ:EVBG), with a stake worth $512.3 million reported as of the end of September. Trailing Select Equity Group was Sylebra Capital Management, which amassed a stake valued at $208.5 million. Polar Capital, Motley Fool Asset Management, and Alta Park Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Cota Capital allocated the biggest weight to Everbridge, Inc. (NASDAQ:EVBG), around 7.89% of its 13F portfolio. Sylebra Capital Management is also relatively very bullish on the stock, designating 6.5 percent of its 13F equity portfolio to EVBG.
Consequently, specific money managers have jumped into Everbridge, Inc. (NASDAQ:EVBG) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in Everbridge, Inc. (NASDAQ:EVBG). Arrowstreet Capital had $22.8 million invested in the company at the end of the quarter. James Crichton's Hitchwood Capital Management also made a $17.3 million investment in the stock during the quarter. The following funds were also among the new EVBG investors: Michael Gelband's ExodusPoint Capital, Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management, and Greg Eisner's Engineers Gate Manager.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Everbridge, Inc. (NASDAQ:EVBG) but similarly valued. These stocks are The Mosaic Company (NYSE:MOS), Kemper Corporation (NYSE:KMPR), Owl Rock Capital Corporation (NYSE:ORCC), New York Community Bancorp, Inc. (NYSE:NYCB), Flowers Foods, Inc. (NYSE:FLO), Nutanix, Inc. (NASDAQ:NTNX), and HollyFrontier Corporation (NYSE:HFC). All of these stocks' market caps match EVBG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MOS,32,450160,3 KMPR,16,37427,3 ORCC,15,136062,4 NYCB,28,221363,6 FLO,24,269421,-3 NTNX,20,584504,-9 HFC,27,273880,3 Average,23.1,281831,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $282 million. That figure was $1162 million in EVBG's case. The Mosaic Company (NYSE:MOS) is the most popular stock in this table. On the other hand Owl Rock Capital Corporation (NYSE:ORCC) is the least popular one with only 15 bullish hedge fund positions. Compared to these stocks Everbridge, Inc. (NASDAQ:EVBG) is more popular among hedge funds. Our overall hedge fund sentiment score for EVBG is 90. 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 30% in 2020 through October 23rd and still beat the market by 21 percentage points. Unfortunately EVBG wasn't nearly as popular as these 10 stocks and hedge funds that were betting on EVBG were disappointed as the stock returned -8.1% since the end of the second quarter (through 10/23) 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.
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