Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. This time it may be different. During the fourth quarter of 2018 we observed increased volatility and small-cap stocks underperformed the market. Hedge fund investor letters indicated that they are cutting their overall exposure, closing out some position and doubling down on others. Let’s take a look at the hedge fund sentiment towards Everbridge, Inc. (NASDAQ:EVBG) to find out whether it was one of their high conviction long-term ideas.
Everbridge, Inc. (NASDAQ:EVBG) shareholders have witnessed an increase in hedge fund interest in recent months. EVBG was in 22 hedge funds’ portfolios at the end of December. There were 19 hedge funds in our database with EVBG positions at the end of the previous quarter. 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 32 percentage points since May 2014 through March 12, 2019 (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 check out the new hedge fund action encompassing Everbridge, Inc. (NASDAQ:EVBG).
Hedge fund activity in Everbridge, Inc. (NASDAQ:EVBG)
At the end of the fourth quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 16% from the second quarter of 2018. On the other hand, there were a total of 14 hedge funds with a bullish position in EVBG a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Light Street Capital, managed by Glen Kacher, holds the largest position in Everbridge, Inc. (NASDAQ:EVBG). Light Street Capital has a $58.3 million position in the stock, comprising 4.4% of its 13F portfolio. Sitting at the No. 2 spot is Polar Capital, led by Brian Ashford-Russell and Tim Woolley, holding a $39.8 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other peers that are bullish consist of Richard Driehaus’s Driehaus Capital, Panayotis Takis Sparaggis’s Alkeon Capital Management and Robert Joseph Caruso’s Select Equity Group.
Now, key money managers were leading the bulls’ herd. Select Equity Group, managed by Robert Joseph Caruso, established the most valuable position in Everbridge, Inc. (NASDAQ:EVBG). Select Equity Group had $18.3 million invested in the company at the end of the quarter. Bruce Garelick’s Garelick Capital Partners also initiated a $11.5 million position during the quarter. The other funds with new positions in the stock are John Kim’s Night Owl Capital Management, D. E. Shaw’s D E Shaw, and Jack Ripsteen’s Potrero Capital Research.
Let’s go over hedge fund activity in other stocks similar to Everbridge, Inc. (NASDAQ:EVBG). We will take a look at Shake Shack Inc (NYSE:SHAK), Guess’, Inc. (NYSE:GES), iRhythm Technologies, Inc. (NASDAQ:IRTC), and Eagle Bancorp, Inc. (NASDAQ:EGBN). All of these 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 |
|---|---|---|---|
| SHAK | 19 | 247116 | -3 |
| GES | 19 | 106696 | 2 |
| IRTC | 23 | 285377 | 0 |
| EGBN | 12 | 22162 | -7 |
| Average | 18.25 | 165338 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $251 million in EVBG’s case. iRhythm Technologies, Inc. (NASDAQ:IRTC) is the most popular stock in this table. On the other hand Eagle Bancorp, Inc. (NASDAQ:EGBN) is the least popular one with only 12 bullish hedge fund positions. Everbridge, Inc. (NASDAQ:EVBG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on EVBG, though not to the same extent, as the stock returned 20.4% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
