Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is Everi Holdings Inc (NYSE:EVRI) a marvelous stock to buy now? Hedge funds are in an optimistic mood. The number of long hedge fund bets increased by 1 lately. Our calculations also showed that EVRI 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 18 percentage points since May 2014 through December 3, 2018 (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 regarding Everi Holdings Inc (NYSE:EVRI).
Hedge fund activity in Everi Holdings Inc (NYSE:EVRI)
At the end of the third quarter, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 4% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EVRI over the last 13 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Indaba Capital Management was the largest shareholder of Everi Holdings Inc (NYSE:EVRI), with a stake worth $46.3 million reported as of the end of September. Trailing Indaba Capital Management was Private Capital Management, which amassed a stake valued at $33.1 million. Renaissance Technologies, Archer Capital Management, and Becker Drapkin Management were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, some big names have been driving this bullishness. G2 Investment Partners Management, managed by Josh Goldberg, assembled the most valuable position in Everi Holdings Inc (NYSE:EVRI). G2 Investment Partners Management had $2.5 million invested in the company at the end of the quarter. Nick Thakore’s Diametric Capital also initiated a $1.3 million position during the quarter. The following funds were also among the new EVRI investors: Paul Marshall and Ian Wace’s Marshall Wace LLP, Mark Broach’s Manatuck Hill Partners, and Arnaud Ajdler’s Engine Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Everi Holdings Inc (NYSE:EVRI) but similarly valued. We will take a look at Invesco Municipal Trust (NYSE:VKQ), QCR Holdings, Inc. (NASDAQ:QCRH), Caesarstone Ltd. (NASDAQ:CSTE), and AllianzGI Equity & Convertible Income Fund (NYSE:NIE). This group of stocks’ market caps are similar to EVRI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VKQ | 3 | 765 | 0 |
| QCRH | 8 | 69171 | -3 |
| CSTE | 3 | 4503 | -2 |
| NIE | 2 | 214 | 1 |
| Average | 4 | 18663 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4 hedge funds with bullish positions and the average amount invested in these stocks was $19 million. That figure was $238 million in EVRI’s case. QCR Holdings, Inc. (NASDAQ:QCRH) is the most popular stock in this table. On the other hand AllianzGI Equity & Convertible Income Fund (NYSE:NIE) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Everi Holdings Inc (NYSE:EVRI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
