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Were Hedge Funds Right About Flocking Into Evercore Inc. (EVR) ?

Abigail Fisher

Is Evercore Inc. (NYSE:EVR) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Evercore Inc. (NYSE:EVR) shareholders have witnessed an increase in support from the world's most elite money managers lately. EVR was in 24 hedge funds' portfolios at the end of December. There were 22 hedge funds in our database with EVR holdings at the end of the previous quarter. Our calculations also showed that EVR isn't among the 30 most popular stocks among hedge funds.

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 has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

David Keidan of Buckingham Capital

We're going to take a glance at the new hedge fund action regarding Evercore Inc. (NYSE:EVR).

How have hedgies been trading Evercore Inc. (NYSE:EVR)?

At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EVR over the last 14 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

EVR_apr2019

The largest stake in Evercore Inc. (NYSE:EVR) was held by Renaissance Technologies, which reported holding $61.5 million worth of stock at the end of September. It was followed by Millennium Management with a $59.3 million position. Other investors bullish on the company included Citadel Investment Group, Balyasny Asset Management, and Daruma Asset Management.

As industrywide interest jumped, some big names have been driving this bullishness. Balyasny Asset Management, managed by Dmitry Balyasny, created the largest position in Evercore Inc. (NYSE:EVR). Balyasny Asset Management had $33.7 million invested in the company at the end of the quarter. Gregg Moskowitz's Interval Partners also initiated a $6.9 million position during the quarter. The following funds were also among the new EVR investors: Peter Seuss's Prana Capital Management, David Keidan's Buckingham Capital Management, and Hoon Kim's Quantinno Capital.

Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Evercore Inc. (NYSE:EVR) but similarly valued. These stocks are Antero Resources Corp (NYSE:AR), B2Gold Corp (NYSE:BTG), Gold Fields Limited (NYSE:GFI), and Armstrong World Industries, Inc. (NYSE:AWI). This group of stocks' market caps are closest to EVR's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AR,22,920124,2 BTG,17,104860,3 GFI,9,160670,-1 AWI,26,519892,4 Average,18.5,426387,2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.5 hedge funds with bullish positions and the average amount invested in these stocks was $426 million. That figure was $303 million in EVR's case. Armstrong World Industries, Inc. (NYSE:AWI) is the most popular stock in this table. On the other hand Gold Fields Limited (NYSE:GFI) is the least popular one with only 9 bullish hedge fund positions. Evercore Inc. (NYSE:EVR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on EVR as the stock returned 32.8% and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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