How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Euronet Worldwide, Inc. (NASDAQ:EEFT) and determine whether hedge funds had an edge regarding this stock.
Euronet Worldwide, Inc. (NASDAQ:EEFT) has experienced a decrease in hedge fund sentiment in recent months. Euronet Worldwide, Inc. (NASDAQ:EEFT) was in 38 hedge funds’ portfolios at the end of September. The all time high for this statistic is 47. Our calculations also showed that EEFT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Michael Gelband of ExodusPoint Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now let’s review the latest hedge fund action surrounding Euronet Worldwide, Inc. (NASDAQ:EEFT).
Do Hedge Funds Think EEFT Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 38 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in EEFT over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Joho Capital held the most valuable stake in Euronet Worldwide, Inc. (NASDAQ:EEFT), which was worth $59.8 million at the end of the third quarter. On the second spot was ExodusPoint Capital which amassed $41.7 million worth of shares. Cardinal Capital, LMR Partners, and Citadel Investment Group 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 Joho Capital allocated the biggest weight to Euronet Worldwide, Inc. (NASDAQ:EEFT), around 8.04% of its 13F portfolio. Strycker View Capital is also relatively very bullish on the stock, dishing out 6.06 percent of its 13F equity portfolio to EEFT.
Because Euronet Worldwide, Inc. (NASDAQ:EEFT) has faced a decline in interest from the smart money, it’s easy to see that there is a sect of funds that elected to cut their full holdings in the third quarter. It’s worth mentioning that Howard Marks’s Oaktree Capital Management said goodbye to the biggest position of the 750 funds monitored by Insider Monkey, worth close to $6.7 million in stock. Ryan Tolkin (CIO)’s fund, Schonfeld Strategic Advisors, also said goodbye to its stock, about $5.4 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks similar to Euronet Worldwide, Inc. (NASDAQ:EEFT). These stocks are ADT Inc. (NYSE:ADT), Marriott Vacations Worldwide Corporation (NYSE:VAC), Axalta Coating Systems Ltd (NYSE:AXTA), Celsius Holdings, Inc. (NASDAQ:CELH), Kornit Digital Ltd. (NASDAQ:KRNT), Sportradar Group AG (NASDAQ:SRAD), and Fiverr International Ltd. (NYSE:FVRR). This group of stocks’ market caps are closest to EEFT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADT | 18 | 335536 | -3 |
| VAC | 23 | 751056 | -12 |
| AXTA | 37 | 1048946 | -10 |
| CELH | 22 | 220511 | 2 |
| KRNT | 22 | 287826 | 1 |
| SRAD | 30 | 158145 | 30 |
| FVRR | 29 | 520429 | -1 |
| Average | 25.9 | 474636 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.9 hedge funds with bullish positions and the average amount invested in these stocks was $475 million. That figure was $380 million in EEFT’s case. Axalta Coating Systems Ltd (NYSE:AXTA) is the most popular stock in this table. On the other hand ADT Inc. (NYSE:ADT) is the least popular one with only 18 bullish hedge fund positions. Compared to these stocks Euronet Worldwide, Inc. (NASDAQ:EEFT) is more popular among hedge funds. Our overall hedge fund sentiment score for EEFT is 77.3. 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 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 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on EEFT as the stock returned 5.2% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
Follow Euronet Worldwide Inc. (NASDAQ:EEFT)
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Disclosure: None. This article was originally published at Insider Monkey.
