Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published this article and predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits.
Is Euronet Worldwide, Inc. (NASDAQ:EEFT) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Euronet Worldwide, Inc. (NASDAQ:EEFT) was in 47 hedge funds’ portfolios at the end of December. EEFT investors should pay attention to an increase in activity from the world’s largest hedge funds of late. There were 36 hedge funds in our database with EEFT positions at the end of the previous quarter. Our calculations also showed that EEFT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Ken Griffin of Citadel Investment Group
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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Keeping this in mind let’s go over the latest hedge fund action surrounding Euronet Worldwide, Inc. (NASDAQ:EEFT).
Hedge fund activity in Euronet Worldwide, Inc. (NASDAQ:EEFT)
Heading into the first quarter of 2020, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 31% from the third quarter of 2019. By comparison, 31 hedge funds held shares or bullish call options in EEFT a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the number one position in Euronet Worldwide, Inc. (NASDAQ:EEFT), worth close to $72.2 million, amounting to less than 0.1%% of its total 13F portfolio. Coming in second is GLG Partners, managed by Noam Gottesman, which holds a $33.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish comprise Israel Englander’s Millennium Management, Seymour Sy Kaufman and Michael Stark’s Crosslink Capital and George McCabe’s Portolan Capital Management. In terms of the portfolio weights assigned to each position Crosslink Capital allocated the biggest weight to Euronet Worldwide, Inc. (NASDAQ:EEFT), around 6.95% of its 13F portfolio. QVT Financial is also relatively very bullish on the stock, dishing out 4.6 percent of its 13F equity portfolio to EEFT.
As one would reasonably expect, key money managers were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, initiated the largest position in Euronet Worldwide, Inc. (NASDAQ:EEFT). Point72 Asset Management had $12.9 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $6.8 million investment in the stock during the quarter. The other funds with brand new EEFT positions are Alexander Charles McAree’s Red Cedar Management, Jim O’Brien and Jonathan Dorfman’s Napier Park Global Capital, and Peter Algert and Kevin Coldiron’s Algert Coldiron Investors.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Euronet Worldwide, Inc. (NASDAQ:EEFT) but similarly valued. We will take a look at Molina Healthcare, Inc. (NYSE:MOH), Cable One Inc (NYSE:CABO), Ionis Pharmaceuticals, Inc. (NASDAQ:IONS), and Pool Corporation (NASDAQ:POOL). This group of stocks’ market values are similar to EEFT’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MOH | 35 | 1277477 | 8 |
| CABO | 19 | 578805 | 5 |
| IONS | 27 | 444148 | 1 |
| POOL | 28 | 445007 | -2 |
| Average | 27.25 | 686359 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.25 hedge funds with bullish positions and the average amount invested in these stocks was $686 million. That figure was $410 million in EEFT’s case. Molina Healthcare, Inc. (NYSE:MOH) is the most popular stock in this table. On the other hand Cable One Inc (NYSE:CABO) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Euronet Worldwide, Inc. (NASDAQ:EEFT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 12.9% in 2020 through March 9th and still beat the market by 1.9 percentage points. Unfortunately EEFT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EEFT were disappointed as the stock returned -37.8% during the first two months of 2020 (through March 9th) 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 most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.
