Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards Equitable Holdings, Inc. (NYSE:EQH).
Is EQH a good stock to buy? Equitable Holdings, Inc. (NYSE:EQH) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. Equitable Holdings, Inc. (NYSE:EQH) was in 44 hedge funds’ portfolios at the end of March. The all time high for this statistic is 46. Our calculations also showed that EQH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
At the moment there are plenty of formulas market participants use to assess publicly traded companies. A duo of the less known formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the top money managers can outpace their index-focused peers by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Richard S. Pzena of Pzena Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a gander at the fresh hedge fund action surrounding Equitable Holdings, Inc. (NYSE:EQH).
Do Hedge Funds Think EQH Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 44 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in EQH a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the biggest position in Equitable Holdings, Inc. (NYSE:EQH). Pzena Investment Management has a $654.2 million position in the stock, comprising 2.7% of its 13F portfolio. Coming in second is Viking Global, managed by Andreas Halvorsen, which holds a $195.3 million position; 0.6% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism consist of John Petry’s Sessa Capital, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Soapstone Capital allocated the biggest weight to Equitable Holdings, Inc. (NYSE:EQH), around 13.35% of its 13F portfolio. Sessa Capital is also relatively very bullish on the stock, earmarking 6.24 percent of its 13F equity portfolio to EQH.
Seeing as Equitable Holdings, Inc. (NYSE:EQH) has faced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of funds that elected to cut their positions entirely last quarter. At the top of the heap, Ed Bosek’s BeaconLight Capital dumped the largest position of the “upper crust” of funds watched by Insider Monkey, worth about $7.1 million in stock. Renaissance Technologies, also dumped its stock, about $6.9 million worth. These moves are interesting, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Equitable Holdings, Inc. (NYSE:EQH). We will take a look at argenx SE (NASDAQ:ARGX), Agnico Eagle Mines Limited (NYSE:AEM), DENTSPLY SIRONA Inc. (NASDAQ:XRAY), Sociedad Quimica y Minera (NYSE:SQM), Howmet Aerospace Inc. (NYSE:HWM), Elanco Animal Health Incorporated (NYSE:ELAN), and Pool Corporation (NASDAQ:POOL). This group of stocks’ market caps are closest to EQH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ARGX | 27 | 1375874 | 5 |
| AEM | 28 | 247180 | -8 |
| XRAY | 26 | 1218918 | -2 |
| SQM | 16 | 142465 | 2 |
| HWM | 51 | 3959776 | 2 |
| ELAN | 42 | 1710158 | -1 |
| POOL | 41 | 1014649 | 8 |
| Average | 33 | 1381289 | 0.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1381 million. That figure was $1699 million in EQH’s case. Howmet Aerospace Inc. (NYSE:HWM) is the most popular stock in this table. On the other hand Sociedad Quimica y Minera (NYSE:SQM) is the least popular one with only 16 bullish hedge fund positions. Equitable Holdings, Inc. (NYSE:EQH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EQH is 71.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and beat the market again by 6.1 percentage points. Unfortunately EQH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EQH were disappointed as the stock returned -9.3% since the end of March (through 6/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Equitable Holdings Inc. (NYSE:EQH)
Follow Equitable Holdings Inc. (NYSE:EQH)
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Disclosure: None. This article was originally published at Insider Monkey.
