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 Evercore Inc. (NYSE:EVR).
Is EVR stock a buy? Money managers were in a bullish mood. The number of bullish hedge fund positions inched up by 1 lately. Evercore Inc. (NYSE:EVR) was in 28 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 33. Our calculations also showed that EVR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Robert Pohly of Samlyn Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 website. With all of this in mind let’s take a glance at the fresh hedge fund action encompassing Evercore Inc. (NYSE:EVR).
Do Hedge Funds Think EVR Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in EVR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Samlyn Capital, managed by Robert Pohly, holds the number one position in Evercore Inc. (NYSE:EVR). Samlyn Capital has a $36.2 million position in the stock, comprising 0.5% of its 13F portfolio. On Samlyn Capital’s heels is Chuck Royce of Royce & Associates, with a $35 million position; 0.3% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors with similar optimism encompass James Parsons’s Junto Capital Management, John W. Rogers’s Ariel Investments and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Junto Capital Management allocated the biggest weight to Evercore Inc. (NYSE:EVR), around 0.96% of its 13F portfolio. CSat Investment Advisory is also relatively very bullish on the stock, dishing out 0.74 percent of its 13F equity portfolio to EVR.
As aggregate interest increased, specific money managers were breaking ground themselves. Samlyn Capital, managed by Robert Pohly, established the most outsized position in Evercore Inc. (NYSE:EVR). Samlyn Capital had $36.2 million invested in the company at the end of the quarter. Anand Parekh’s Alyeska Investment Group also initiated a $10.3 million position during the quarter. The other funds with new positions in the stock are Louis Bacon’s Moore Global Investments, Phill Gross and Robert Atchinson’s Adage Capital Management, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s now take a look at hedge fund activity in other stocks similar to Evercore Inc. (NYSE:EVR). These stocks are Lazard Ltd (NYSE:LAZ), Envestnet Inc (NYSE:ENV), Madison Square Garden Sports Corp. (NYSE:MSGS), Rush Street Interactive, Inc. (NYSE:RSI), Open Lending Corporation (NASDAQ:LPRO), Companhia Energetica Minas Gerais (NYSE:CIG), and Sunnova Energy International Inc. (NYSE:NOVA). This group of stocks’ market caps are closest to EVR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LAZ | 20 | 701466 | 1 |
| ENV | 28 | 122555 | 3 |
| MSGS | 44 | 973161 | -4 |
| RSI | 26 | 224704 | 26 |
| LPRO | 34 | 685554 | 11 |
| CIG | 12 | 59210 | 3 |
| NOVA | 32 | 684620 | 9 |
| Average | 28 | 493039 | 7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $493 million. That figure was $298 million in EVR’s case. Madison Square Garden Sports Corp. (NYSE:MSGS) is the most popular stock in this table. On the other hand Companhia Energetica Minas Gerais (NYSE:CIG) is the least popular one with only 12 bullish hedge fund positions. Evercore Inc. (NYSE:EVR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EVR is 56.5. 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. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.3% in 2021 through April 19th and still beat the market by 0.9 percentage points. A small number of hedge funds were also right about betting on EVR as the stock returned 27.7% since the end of the fourth quarter (through 4/19) and outperformed the market by an even larger margin.
Follow Evercore Inc. (NYSE:EVR)
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Disclosure: None. This article was originally published at Insider Monkey.
