Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that’s why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in EQT Corporation (NYSE:EQT)? The smart money sentiment can provide an answer to this question.
EQT Corporation (NYSE:EQT) has seen a decrease in activity from the world’s largest hedge funds lately. EQT was in 36 hedge funds’ portfolios at the end of the first quarter of 2019. There were 44 hedge funds in our database with EQT holdings at the end of the previous quarter. Our calculations also showed that eqt isn’t among the 30 most popular stocks among hedge funds.
In the eyes of most traders, hedge funds are viewed as unimportant, outdated investment vehicles of years past. While there are more than 8000 funds trading today, Our experts choose to focus on the elite of this group, about 750 funds. Most estimates calculate that this group of people oversee most of all hedge funds’ total capital, and by tracking their inimitable equity investments, Insider Monkey has unsheathed a number of investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship hedge fund strategy defeated the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
Michael Lowenstein of Kensico Capital
Let’s take a gander at the fresh hedge fund action regarding EQT Corporation (NYSE:EQT).
How are hedge funds trading EQT Corporation (NYSE:EQT)?
At the end of the first quarter, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. On the other hand, there were a total of 48 hedge funds with a bullish position in EQT a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in EQT Corporation (NYSE:EQT) was held by D E Shaw, which reported holding $242.7 million worth of stock at the end of March. It was followed by Kensico Capital with a $191.9 million position. Other investors bullish on the company included Millennium Management, Canyon Capital Advisors, and Citadel Investment Group.
Judging by the fact that EQT Corporation (NYSE:EQT) has faced declining sentiment from hedge fund managers, it’s easy to see that there was a specific group of hedge funds that slashed their full holdings last quarter. It’s worth mentioning that David Cohen and Harold Levy’s Iridian Asset Management dropped the largest stake of all the hedgies tracked by Insider Monkey, valued at about $47.8 million in stock, and Todd J. Kantor’s Encompass Capital Advisors was right behind this move, as the fund sold off about $44.4 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 8 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks similar to EQT Corporation (NYSE:EQT). These stocks are Toll Brothers Inc (NYSE:TOL), Bilibili Inc. (NASDAQ:BILI), Oshkosh Corporation (NYSE:OSK), and National Fuel Gas Company (NYSE:NFG). All of these stocks’ market caps are similar to EQT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TOL | 28 | 389774 | 0 |
| BILI | 22 | 448742 | 2 |
| OSK | 24 | 353710 | -5 |
| NFG | 16 | 236763 | 0 |
| Average | 22.5 | 357247 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $357 million. That figure was $1181 million in EQT’s case. Toll Brothers Inc (NYSE:TOL) is the most popular stock in this table. On the other hand National Fuel Gas Company (NYSE:NFG) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks EQT Corporation (NYSE:EQT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately EQT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EQT were disappointed as the stock returned -11.8% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
