Hedge Funds Have Never Been Less Bullish On Evergy, Inc. (EVRG)

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Evergy, Inc. (NYSE:EVRG).

Evergy, Inc. (NYSE:EVRG) investors should be aware of a decrease in enthusiasm from smart money lately. Evergy, Inc. (NYSE:EVRG) was in 21 hedge funds’ portfolios at the end of June. The all time high for this statistic is 40. Our calculations also showed that EVRG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Mario Gabelli of GAMCO Investors

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 EV 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. Now we’re going to check out the recent hedge fund action encompassing Evergy, Inc. (NYSE:EVRG).

Do Hedge Funds Think EVRG Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -30% from the previous quarter. By comparison, 40 hedge funds held shares or bullish call options in EVRG a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Paul Singer’s Elliott Investment Management has the largest position in Evergy, Inc. (NYSE:EVRG), worth close to $637 million, comprising 4.9% of its total 13F portfolio. The second largest stake is held by Millennium Management, led by Israel Englander, holding a $169.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise D. E. Shaw’s D E Shaw, Mario Gabelli’s GAMCO Investors and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Coann Capital allocated the biggest weight to Evergy, Inc. (NYSE:EVRG), around 8.9% of its 13F portfolio. Elliott Investment Management is also relatively very bullish on the stock, earmarking 4.9 percent of its 13F equity portfolio to EVRG.

Judging by the fact that Evergy, Inc. (NYSE:EVRG) has experienced falling interest from the smart money, we can see that there is a sect of hedge funds who were dropping their full holdings by the end of the second quarter. Intriguingly, Zilvinas Mecelis’s Covalis Capital dropped the biggest investment of the 750 funds watched by Insider Monkey, valued at close to $85.7 million in stock, and Mitch Kuflik and Rob Sobel’s Brahman Capital was right behind this move, as the fund cut about $14 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 9 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Evergy, Inc. (NYSE:EVRG) but similarly valued. We will take a look at Campbell Soup Company (NYSE:CPB), DENTSPLY SIRONA Inc. (NASDAQ:XRAY), Vipshop Holdings Limited (NYSE:VIPS), Fortune Brands Home & Security Inc (NYSE:FBHS), Crown Holdings, Inc. (NYSE:CCK), IAC/InterActiveCorp (NASDAQ:IAC), and Tuya Inc. (NYSE:TUYA). This group of stocks’ market values resemble EVRG’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $956 million. That figure was $1039 million in EVRG’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Tuya Inc. (NYSE:TUYA) is the least popular one with only 8 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. Our overall hedge fund sentiment score for EVRG is 26.2. 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. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on EVRG as the stock returned 7.8% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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

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