Is Elevate Credit, Inc. (NYSE:ELVT) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Elevate Credit, Inc. (NYSE:ELVT) has experienced an increase in support from the world’s most elite money managers recently. Our calculations also showed that ELVT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s analyze the recent hedge fund action regarding Elevate Credit, Inc. (NYSE:ELVT).
How are hedge funds trading Elevate Credit, Inc. (NYSE:ELVT)?
At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in ELVT over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Elevate Credit, Inc. (NYSE:ELVT) was held by Nantahala Capital Management, which reported holding $6.6 million worth of stock at the end of September. It was followed by Prescott Group Capital Management with a $6.3 million position. Other investors bullish on the company included Renaissance Technologies, Intrinsic Edge Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Prescott Group Capital Management allocated the biggest weight to Elevate Credit, Inc. (NYSE:ELVT), around 1.95% of its 13F portfolio. Lyon Street Capital is also relatively very bullish on the stock, earmarking 1.04 percent of its 13F equity portfolio to ELVT.
Now, key hedge funds were breaking ground themselves. Intrinsic Edge Capital, managed by Mark Coe, created the largest position in Elevate Credit, Inc. (NYSE:ELVT). Intrinsic Edge Capital had $1.3 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $0.2 million investment in the stock during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Elevate Credit, Inc. (NYSE:ELVT) but similarly valued. We will take a look at Calyxt, Inc. (NASDAQ:CLXT), Bel Fuse, Inc. (NASDAQ:BELFB), Federated National Holding Co (NASDAQ:FNHC), and Foamix Pharmaceuticals Ltd (NASDAQ:FOMX). All of these stocks’ market caps match ELVT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CLXT | 5 | 3076 | 2 |
| BELFB | 7 | 18883 | 0 |
| FNHC | 7 | 24724 | 0 |
| FOMX | 12 | 59402 | -1 |
| Average | 7.75 | 26521 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $21 million in ELVT’s case. Foamix Pharmaceuticals Ltd (NASDAQ:FOMX) is the most popular stock in this table. On the other hand Calyxt, Inc. (NASDAQ:CLXT) is the least popular one with only 5 bullish hedge fund positions. Elevate Credit, Inc. (NYSE:ELVT) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately ELVT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ELVT were disappointed as the stock returned -1.4% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
