Billionaire hedge fund managers such as Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Everbridge, Inc. (NASDAQ:EVBG) a bargain? Prominent investors are becoming less confident. The number of bullish hedge fund bets retreated by 1 in recent months. Our calculations also showed that evbg 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 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.
We’re going to take a peek at the new hedge fund action encompassing Everbridge, Inc. (NASDAQ:EVBG).
Hedge fund activity in Everbridge, Inc. (NASDAQ:EVBG)
Heading into the fourth quarter of 2018, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in EVBG over the last 13 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Light Street Capital was the largest shareholder of Everbridge, Inc. (NASDAQ:EVBG), with a stake worth $44 million reported as of the end of September. Trailing Light Street Capital was Polar Capital, which amassed a stake valued at $26.5 million. Millennium Management, Driehaus Capital, and Calixto Global Investors were also very fond of the stock, giving the stock large weights in their portfolios.
Since Everbridge, Inc. (NASDAQ:EVBG) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there is a sect of hedgies who sold off their entire stakes by the end of the third quarter. Interestingly, Bruce Garelick’s Garelick Capital Partners cut the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $17.6 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund cut about $4.4 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to Everbridge, Inc. (NASDAQ:EVBG). We will take a look at Fabrinet (NYSE:FN), FS Investment Corporation (NYSE:FSIC), Matson, Inc. (NYSE:MATX), and Universal Insurance Holdings, Inc. (NYSE:UVE). This group of stocks’ market caps are similar to EVBG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FN | 15 | 116270 | 5 |
| FSIC | 9 | 21686 | 2 |
| MATX | 9 | 14371 | 2 |
| UVE | 14 | 44205 | -1 |
| Average | 11.75 | 49133 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $49 million. That figure was $199 million in EVBG’s case. Fabrinet (NYSE:FN) is the most popular stock in this table. On the other hand FS Investment Corporation (NYSE:FSIC) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Everbridge, Inc. (NASDAQ:EVBG) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
