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Did Hedge Funds Drop The Ball On EverQuote, Inc. (EVER) ?

After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of March 31. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards EverQuote, Inc. (NASDAQ:EVER).

EverQuote, Inc. (NASDAQ:EVER) investors should be aware of an increase in activity from the world’s largest hedge funds lately. EVER was in 10 hedge funds’ portfolios at the end of March. There were 7 hedge funds in our database with EVER holdings at the end of the previous quarter. Our calculations also showed that EVER isn’t among the 30 most popular stocks among hedge funds.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Paul Reeder PAR Capital Management

Paul Reeder of PAR Capital

We’re going to take a glance at the fresh hedge fund action surrounding EverQuote, Inc. (NASDAQ:EVER).

How are hedge funds trading EverQuote, Inc. (NASDAQ:EVER)?

At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 43% from the previous quarter. On the other hand, there were a total of 0 hedge funds with a bullish position in EVER a year ago. With hedge funds’ 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).

EVER_june2019

The largest stake in EverQuote, Inc. (NASDAQ:EVER) was held by Royce & Associates, which reported holding $4.5 million worth of stock at the end of March. It was followed by Adage Capital Management with a $2.6 million position. Other investors bullish on the company included PAR Capital Management, G2 Investment Partners Management, and D E Shaw.

Consequently, specific money managers were leading the bulls’ herd. G2 Investment Partners Management, managed by Josh Goldberg, established the most valuable position in EverQuote, Inc. (NASDAQ:EVER). G2 Investment Partners Management had $0.9 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $0.4 million position during the quarter. The other funds with brand new EVER positions are Israel Englander’s Millennium Management, Peter A. Wright’s P.A.W. CAPITAL PARTNERS, and J. Carlo Cannell’s Cannell Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as EverQuote, Inc. (NASDAQ:EVER) but similarly valued. We will take a look at Charah Solutions, Inc. (NYSE:CHRA), Smart Sand, Inc. (NASDAQ:SND), Menlo Therapeutics Inc. (NASDAQ:MNLO), and Neon Therapeutics, Inc. (NASDAQ:NTGN). This group of stocks’ market valuations are closest to EVER’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CHRA 3 11223 -1
SND 6 4100 1
MNLO 9 69374 2
NTGN 5 11325 1
Average 5.75 24006 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 5.75 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $11 million in EVER’s case. Menlo Therapeutics Inc. (NASDAQ:MNLO) is the most popular stock in this table. On the other hand Charah Solutions, Inc. (NYSE:CHRA) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks EverQuote, Inc. (NASDAQ:EVER) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Hedge funds were also right about betting on EVER as the stock returned 61.8% during the same period 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.

Disclosure: None. This article was originally published at Insider Monkey.

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