Was The Smart Money Right About EQT Corporation (EQT)?
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 EQT Corporation (NYSE:EQT).
Is EQT Corporation (NYSE:EQT) a buy here? The best stock pickers were getting more optimistic. The number of long hedge fund positions moved up by 4 in recent months. EQT Corporation (NYSE:EQT) was in 34 hedge funds' portfolios at the end of June. The all time high for this statistics is 50. Our calculations also showed that EQT 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.
If you'd ask most market participants, hedge funds are seen as underperforming, outdated investment vehicles of the past. While there are over 8000 funds trading today, Our researchers hone in on the bigwigs of this group, approximately 850 funds. These investment experts orchestrate most of the smart money's total asset base, and by tailing their top stock picks, Insider Monkey has spotted numerous investment strategies that have historically defeated the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
Peter Rathjens of Arrowstreet Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. Last week, most investors overlooked a major development because of the presidential elections: Oregon became the first state to legalize psychedelic mushrooms which are shown to have promising results in treating depression, addiction, and PTSD in early stage academic studies. So, we are checking out this psychedelic drug stock idea right now. 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. With all of this in mind we're going to take a peek at the recent hedge fund action encompassing EQT Corporation (NYSE:EQT).
How have hedgies been trading EQT Corporation (NYSE:EQT)?
Heading into the third quarter of 2020, a total of 34 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the first quarter of 2020. By comparison, 35 hedge funds held shares or bullish call options in EQT a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Citadel Investment Group was the largest shareholder of EQT Corporation (NYSE:EQT), with a stake worth $87 million reported as of the end of June. Trailing Citadel Investment Group was Arrowstreet Capital, which amassed a stake valued at $55.8 million. Encompass Capital Advisors, Firefly Value Partners, and D E Shaw 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 Quaker Capital Investments allocated the biggest weight to EQT Corporation (NYSE:EQT), around 8.3% of its 13F portfolio. Firefly Value Partners is also relatively very bullish on the stock, dishing out 6.72 percent of its 13F equity portfolio to EQT.
Now, key hedge funds have jumped into EQT Corporation (NYSE:EQT) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the largest position in EQT Corporation (NYSE:EQT). Arrowstreet Capital had $55.8 million invested in the company at the end of the quarter. David Greenspan's Slate Path Capital also made a $19.9 million investment in the stock during the quarter. The other funds with new positions in the stock are Mark G. Schoeppner's Quaker Capital Investments, Israel Englander's Millennium Management, and George McCabe's Portolan Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as EQT Corporation (NYSE:EQT) but similarly valued. We will take a look at Bank OZK (NASDAQ:OZK), Foot Locker, Inc. (NYSE:FL), NovaGold Resources Inc. (NYSE:NG), UFP Industries, Inc. (NASDAQ:UFPI), Synovus Financial Corp. (NYSE:SNV), J2 Global Inc (NASDAQ:JCOM), and Sprouts Farmers Market Inc (NASDAQ:SFM). This group of stocks' market caps match EQT's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position OZK,17,160531,-8 FL,29,309984,8 NG,23,375744,4 UFPI,18,68772,1 SNV,27,185112,-6 JCOM,30,203643,9 SFM,25,467061,-5 Average,24.1,252978,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $253 million. That figure was $374 million in EQT's case. J2 Global Inc (NASDAQ:JCOM) is the most popular stock in this table. On the other hand Bank OZK (NASDAQ:OZK) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks EQT Corporation (NYSE:EQT) is more popular among hedge funds. Our overall hedge fund sentiment score for EQT is 79.4. 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 returned 23% in 2020 through October 30th but still managed to beat the market by 20.1 percentage points. Hedge funds were also right about betting on EQT as the stock returned 27.2% since the end of June (through 10/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
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