Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Evergy, Inc. (NYSE:EVRG).
Is Evergy, Inc. (NYSE:EVRG) a buy right now? Prominent investors are getting less bullish. The number of bullish hedge fund positions fell by 2 in recent months. Our calculations also showed that EVRG isn’t among the 30 most popular stocks among hedge funds. EVRG was in 23 hedge funds’ portfolios at the end of September. There were 25 hedge funds in our database with EVRG positions at the end of the previous quarter.
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 18 percentage points since May 2014 through December 3, 2018 (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.
Let’s review the fresh hedge fund action encompassing Evergy, Inc. (NYSE:EVRG).
What does the smart money think about Evergy, Inc. (NYSE:EVRG)?
At Q3’s end, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EVRG over the last 13 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.
The largest stake in Evergy, Inc. (NYSE:EVRG) was held by Renaissance Technologies, which reported holding $316.8 million worth of stock at the end of September. It was followed by Zimmer Partners with a $300.4 million position. Other investors bullish on the company included Millennium Management, Citadel Investment Group, and D E Shaw.
Due to the fact that Evergy, Inc. (NYSE:EVRG) has faced bearish sentiment from the smart money, it’s safe to say that there lies a certain “tier” of funds who sold off their full holdings in the third quarter. It’s worth mentioning that Zach Schreiber’s Point State Capital dumped the largest stake of the 700 funds monitored by Insider Monkey, worth close to $21.6 million in stock, and Peter J. Hark’s Shelter Harbor Advisors was right behind this move, as the fund cut about $9.8 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Evergy, Inc. (NYSE:EVRG) but similarly valued. These stocks are Restaurant Brands International Inc (NYSE:QSR), Avangrid, Inc. (NYSE:AGR), Quest Diagnostics Incorporated (NYSE:DGX), and Vulcan Materials Company (NYSE:VMC). This group of stocks’ market caps are similar to EVRG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QSR | 40 | 3833537 | -2 |
| AGR | 18 | 293195 | 2 |
| DGX | 38 | 649415 | 9 |
| VMC | 35 | 1338856 | 1 |
| Average | 32.75 | 1528751 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.75 hedge funds with bullish positions and the average amount invested in these stocks was $1.53 billion. That figure was $1.59 billion in EVRG’s case. Restaurant Brands International Inc (NYSE:QSR) is the most popular stock in this table. On the other hand Avangrid, Inc. (NYSE:AGR) is the least popular one with only 18 bullish hedge fund positions. Evergy, Inc. (NYSE:EVRG) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard QSR might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.