Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Euronet Worldwide, Inc. (NASDAQ:EEFT) to find out whether there were any major changes in hedge funds’ views.
Is Euronet Worldwide, Inc. (NASDAQ:EEFT) ready to rally soon? Prominent investors were betting on the stock. The number of long hedge fund bets advanced by 8 in recent months. Euronet Worldwide, Inc. (NASDAQ:EEFT) was in 40 hedge funds’ portfolios at the end of March. The all time high for this statistic is 47. Our calculations also showed that EEFT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 32 hedge funds in our database with EEFT holdings at the end of December.
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 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind let’s go over the new hedge fund action encompassing Euronet Worldwide, Inc. (NASDAQ:EEFT).
Do Hedge Funds Think EEFT Is A Good Stock To Buy Now?
At the end of March, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. On the other hand, there were a total of 30 hedge funds with a bullish position in EEFT a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
The largest stake in Euronet Worldwide, Inc. (NASDAQ:EEFT) was held by Dorsal Capital Management, which reported holding $94 million worth of stock at the end of December. It was followed by Joho Capital with a $65 million position. Other investors bullish on the company included Arrowstreet Capital, Cardinal Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Joho Capital allocated the biggest weight to Euronet Worldwide, Inc. (NASDAQ:EEFT), around 10.09% of its 13F portfolio. Strycker View Capital is also relatively very bullish on the stock, dishing out 5.17 percent of its 13F equity portfolio to EEFT.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, created the biggest position in Euronet Worldwide, Inc. (NASDAQ:EEFT). Point72 Asset Management had $16.5 million invested in the company at the end of the quarter. Usman Waheed’s Strycker View Capital also initiated a $8.1 million position during the quarter. The other funds with new positions in the stock are Steve Zheng’s Deepcurrents Investment Group, Daniel S. Och’s OZ Management, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Euronet Worldwide, Inc. (NASDAQ:EEFT) but similarly valued. These stocks are Targa Resources Corp (NYSE:TRGP), Virgin Galactic Holdings, Inc. (NYSE:SPCE), Tripadvisor Inc (NASDAQ:TRIP), Phillips 66 Partners LP (NYSE:PSXP), Proofpoint Inc (NASDAQ:PFPT), OneMain Holdings Inc (NYSE:OMF), and Mobile TeleSystems OJSC (NYSE:MBT). This group of stocks’ market values match EEFT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TRGP | 24 | 531977 | -5 |
| SPCE | 17 | 210974 | -6 |
| TRIP | 45 | 1975906 | 4 |
| PSXP | 5 | 45200 | 1 |
| PFPT | 22 | 455170 | -4 |
| OMF | 43 | 886893 | 13 |
| MBT | 11 | 295926 | -2 |
| Average | 23.9 | 628864 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $629 million. That figure was $512 million in EEFT’s case. Tripadvisor Inc (NASDAQ:TRIP) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 5 bullish hedge fund positions. Euronet Worldwide, Inc. (NASDAQ:EEFT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EEFT is 79.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 19.3% in 2021 through June 25th and beat the market again by 4.8 percentage points. Unfortunately EEFT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EEFT were disappointed as the stock returned 5.5% since the end of March (through 6/25) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Euronet Worldwide Inc. (NASDAQ:EEFT)
Follow Euronet Worldwide Inc. (NASDAQ:EEFT)
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Disclosure: None. This article was originally published at Insider Monkey.
