Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards EQT Corporation (NYSE:EQT).
Is EQT Corporation (NYSE:EQT) a sound investment today? Money managers were becoming hopeful. The number of bullish hedge fund positions increased by 4 in recent months. EQT Corporation (NYSE:EQT) was in 43 hedge funds’ portfolios at the end of December. The all time high for this statistic is 50. Our calculations also showed that EQT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 39 hedge funds in our database with EQT holdings at the end of September.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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. Now we’re going to take a gander at the fresh hedge fund action regarding EQT Corporation (NYSE:EQT).
Do Hedge Funds Think EQT Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 10% from the third quarter of 2020. By comparison, 29 hedge funds held shares or bullish call options in EQT a year ago. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, Arrowstreet Capital held the most valuable stake in EQT Corporation (NYSE:EQT), which was worth $52.1 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $32.7 million worth of shares. Appaloosa Management LP, Deep Basin Capital, and Key Square Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Quaker Capital Investments allocated the biggest weight to EQT Corporation (NYSE:EQT), around 8.02% of its 13F portfolio. Key Square Capital Management is also relatively very bullish on the stock, setting aside 6.15 percent of its 13F equity portfolio to EQT.
As aggregate interest increased, some big names have been driving this bullishness. Appaloosa Management LP, managed by David Tepper, initiated the most outsized position in EQT Corporation (NYSE:EQT). Appaloosa Management LP had $27.9 million invested in the company at the end of the quarter. Matt Smith’s Deep Basin Capital also initiated a $26.2 million position during the quarter. The other funds with brand new EQT positions are Phill Gross and Robert Atchinson’s Adage Capital Management, Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners, and Steve Cohen’s Point72 Asset Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as EQT Corporation (NYSE:EQT) but similarly valued. These stocks are Sterling Bancorp (NYSE:STL), Visteon Corp (NYSE:VC), Macy’s, Inc. (NYSE:M), Jamf Holding Corp. (NASDAQ:JAMF), Norbord Inc. (NYSE:OSB), AAON, Inc. (NASDAQ:AAON), and Equitrans Midstream Corporation (NYSE:ETRN). This group of stocks’ market valuations match EQT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| STL | 19 | 305912 | -6 |
| VC | 23 | 285996 | -5 |
| M | 34 | 798444 | 6 |
| JAMF | 26 | 2376513 | 11 |
| OSB | 15 | 225441 | 2 |
| AAON | 13 | 38412 | -3 |
| ETRN | 25 | 407837 | 0 |
| Average | 22.1 | 634079 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $634 million. That figure was $355 million in EQT’s case. Macy’s, Inc. (NYSE:M) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks EQT Corporation (NYSE:EQT) is more popular among hedge funds. Our overall hedge fund sentiment score for EQT is 84.8. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on EQT as the stock returned 50.3% since the end of December (through 4/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
