At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Eaton Vance Corp (NYSE:EV) has seen an increase in enthusiasm from smart money lately. EV was in 17 hedge funds’ portfolios at the end of December. There were 15 hedge funds in our database with EV holdings at the end of the previous quarter. Our calculations also showed that EV isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s check out the key hedge fund action encompassing Eaton Vance Corp (NYSE:EV).
What does the smart money think about Eaton Vance Corp (NYSE:EV)?
At the end of the fourth quarter, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EV over the last 14 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in Eaton Vance Corp (NYSE:EV) was held by Renaissance Technologies, which reported holding $54.1 million worth of stock at the end of September. It was followed by Millennium Management with a $25.2 million position. Other investors bullish on the company included Two Sigma Advisors, D E Shaw, and Citadel Investment Group.
As aggregate interest increased, key money managers were breaking ground themselves. Bridgewater Associates, managed by Ray Dalio, initiated the most valuable position in Eaton Vance Corp (NYSE:EV). Bridgewater Associates had $1.6 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also initiated a $1.4 million position during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Matthew Tewksbury’s Stevens Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Eaton Vance Corp (NYSE:EV) but similarly valued. These stocks are VEON Ltd. (NASDAQ:VEON), Portland General Electric Company (NYSE:POR), Tesaro Inc (NASDAQ:TSRO), and Gardner Denver Holdings, Inc. (NYSE:GDI). This group of stocks’ market values are similar to EV’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VEON | 9 | 27679 | 2 |
| POR | 19 | 249916 | 3 |
| TSRO | 39 | 1357819 | 19 |
| GDI | 27 | 362231 | 3 |
| Average | 23.5 | 499411 | 6.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $499 million. That figure was $126 million in EV’s case. Tesaro Inc (NASDAQ:TSRO) is the most popular stock in this table. On the other hand VEON Ltd. (NASDAQ:VEON) is the least popular one with only 9 bullish hedge fund positions. Eaton Vance Corp (NYSE:EV) is not the least popular stock in this group but hedge fund interest is still below 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. A small number of hedge funds were also right about betting on EV, though not to the same extent, as the stock returned 19.8% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
