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Were Hedge Funds Right About Snapping Up Entravision Communication Corp (EVC)?

Reymerlyn Martin

The financial regulations require hedge funds and wealthy investors that crossed the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on June 28th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Entravision Communication Corporation (NYSE:EVC) based on those filings.

Entravision Communication Corporation (NYSE:EVC) investors should pay attention to an increase in support from the world's most elite money managers in recent months. Our calculations also showed that EVC 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.

5 Most Popular Stocks Among Hedge Funds

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 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 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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.

David Harding

In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources  like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let's check out the key hedge fund action regarding Entravision Communication Corporation (NYSE:EVC).

What have hedge funds been doing with Entravision Communication Corporation (NYSE:EVC)?

At Q2's end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EVC over the last 16 quarters. With hedgies' capital changing hands, there exists a few key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

EVC_nov2019

When looking at the institutional investors followed by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in Entravision Communication Corporation (NYSE:EVC). AQR Capital Management has a $7.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Renaissance Technologies which holds a $5.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism consist of D. E. Shaw's D E Shaw, Israel Englander's Millennium Management and John Overdeck and David Siegel's Two Sigma Advisors.

With a general bullishness amongst the heavyweights, some big names were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Entravision Communication Corporation (NYSE:EVC). Marshall Wace LLP had $0.7 million invested in the company at the end of the quarter. Thomas Bailard's Bailard Inc also made a $0.2 million investment in the stock during the quarter. The following funds were also among the new EVC investors: David Harding's Winton Capital Management, John M. Angelo and Michael L. Gordon's Angelo Gordon & Co, and Gavin Saitowitz and Cisco J. del Valle's Springbok Capital.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Entravision Communication Corporation (NYSE:EVC) but similarly valued. These stocks are Pulse Biosciences, Inc (NASDAQ:PLSE), Weyco Group, Inc. (NASDAQ:WEYS), Superior Group of Companies, Inc. (NASDAQ:SGC), and Mesa Air Group, Inc. (NASDAQ:MESA). All of these stocks' market caps match EVC's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PLSE,1,198,0 WEYS,3,16385,0 SGC,2,4585,-3 MESA,19,62922,2 Average,6.25,21023,-0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $21 million in EVC's case. Mesa Air Group, Inc. (NASDAQ:MESA) is the most popular stock in this table. On the other hand Pulse Biosciences, Inc (NASDAQ:PLSE) is the least popular one with only 1 bullish hedge fund positions. Entravision Communication Corporation (NYSE:EVC) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on EVC, though not to the same extent, as the stock returned 3.5% during the third quarter and outperformed the market as well.

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

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