A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on EVO Payments, Inc. (NASDAQ:EVOP).
EVO Payments, Inc. (NASDAQ:EVOP) investors should pay attention to an increase in support from the world’s most elite money managers recently. EVOP was in 15 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with EVOP holdings at the end of the previous quarter. Our calculations also showed that EVOP 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.
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 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Richard Driehaus of Driehaus Capital
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 take a peek at the fresh hedge fund action encompassing EVO Payments, Inc. (NASDAQ:EVOP).
Hedge fund activity in EVO Payments, Inc. (NASDAQ:EVOP)
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in EVOP a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Greenhouse Funds was the largest shareholder of EVO Payments, Inc. (NASDAQ:EVOP), with a stake worth $16.6 million reported as of the end of September. Trailing Greenhouse Funds was D E Shaw, which amassed a stake valued at $11.1 million. Islet Management, Select Equity Group, and Driehaus Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to EVO Payments, Inc. (NASDAQ:EVOP), around 3.38% of its 13F portfolio. Islet Management is also relatively very bullish on the stock, earmarking 0.61 percent of its 13F equity portfolio to EVOP.
Now, specific money managers were leading the bulls’ herd. Islet Management, managed by Joseph Samuels, assembled the most valuable position in EVO Payments, Inc. (NASDAQ:EVOP). Islet Management had $4.9 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also initiated a $0.7 million position during the quarter. The following funds were also among the new EVOP investors: Renaissance Technologies, Cliff Asness’s AQR Capital Management, and Matthew Halbower’s Pentwater Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as EVO Payments, Inc. (NASDAQ:EVOP) but similarly valued. We will take a look at Visteon Corp (NASDAQ:VC), Glaukos Corporation (NYSE:GKOS), LCI Industries (NYSE:LCII), and Beacon Roofing Supply, Inc. (NASDAQ:BECN). This group of stocks’ market values resemble EVOP’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VC | 20 | 416758 | 3 |
| GKOS | 11 | 69877 | -4 |
| LCII | 14 | 98568 | 4 |
| BECN | 21 | 331266 | 5 |
| Average | 16.5 | 229117 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $229 million. That figure was $45 million in EVOP’s case. Beacon Roofing Supply, Inc. (NASDAQ:BECN) is the most popular stock in this table. On the other hand Glaukos Corporation (NYSE:GKOS) is the least popular one with only 11 bullish hedge fund positions. EVO Payments, Inc. (NASDAQ:EVOP) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and 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 EVOP wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); EVOP investors were disappointed as the stock returned -0.2% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
