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.
EverBank Financial Corp (NYSE:EVER) has seen a decrease in support from the world’s most elite money managers recently. EverBank Financial Corp (NYSE:EVER) was in 8 hedge funds’ portfolios at the end of September. There were 9 hedge funds in our database with EverBank Financial Corp (NYSE:EVER) holdings at the end of the previous quarter. On the other hand, the trading environment surrounding the financial company was somewhat stable, with its stock losing only 1.78% during the quarter. We will find out more about the hedge fund behavior by studying the hedge funds that had positions in EverBank Financial Corp (NYSE:EVER) at the end of the quarter.
Another option to understand hedge fund sentiment is to uncover their response towards stocks with a similar market cap. At the end of this article, we will also compare EverBank Financial Corp (NYSE:EVER) to other stocks including KBR, Inc. (NYSE:KBR), Dycom Industries, Inc. (NYSE:DY), and Texas Capital Bancshares Inc (NASDAQ:TCBI) to get a better sense of its popularity.
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According to most market participants, hedge funds are perceived as unimportant, old investment tools of years past. While there are greater than 8000 funds in operation at the moment, our experts look at the bigwigs of this group, approximately 700 funds. It is estimated that this group of investors commands bulk of the smart money’s total capital, and by keeping track of their matchless equity investments, Insider Monkey has discovered several investment strategies that have historically exceeded the broader indices. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
Keeping this in mind, let’s view the new action surrounding EverBank Financial Corp (NYSE:EVER).
How have hedgies been trading EverBank Financial Corp (NYSE:EVER)?
At the end of Q3, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a drop of 11% from the second quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Sageview Capital, managed by Edward Gilhuly and Scott Stuart, holds the number one position in EverBank Financial Corp (NYSE:EVER). Sageview Capital has a $199 million position in the stock, comprising 75.1% of its 13F portfolio. The second most bullish fund manager is Renaissance Technologies, holding a $11.9 million position; less than 0.1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors with similar optimism encompass D E Shaw, Peter Muller’s PDT Partners, and Cliff Asness’ AQR Capital Management.
Due to the fact that EverBank Financial Corp (NYSE:EVER) has experienced a bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there is a sect of hedge funds that decided to sell off their positions entirely last quarter. Interestingly, Steven B. Klinsky’s New Mountain Capital dropped the biggest investment of all the hedgies monitored by Insider Monkey, valued at an estimated $132.3 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund said goodbye to about $4.8 million worth of shares. These transactions are interesting, as aggregate hedge fund interest was cut by 1 fund last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as EverBank Financial Corp (NYSE:EVER) but similarly valued. We will take a look at KBR, Inc. (NYSE:KBR), Dycom Industries, Inc. (NYSE:DY), Texas Capital Bancshares Inc (NASDAQ:TCBI), and IBERIABANK Corporation (NASDAQ:IBKC). This group of stocks’ market valuations are closest to EverBank Financial Corp (NYSE:EVER)’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KBR | 28 | 709362 | 0 |
| DY | 25 | 579172 | 2 |
| TCBI | 15 | 219834 | -1 |
| IBKC | 8 | 188712 | -2 |
As you can see, these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $424 million. That figure was $216 million in EverBank Financial Corp (NYSE:EVER)’s case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand, IBERIABANK Corporation (NASDAQ:IBKC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks, EverBank Financial Corp (NYSE:EVER) is even less popular than IBERIABANK Corporation (NASDAQ:IBKC). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.
