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Did Hedge Funds Make The Right Call On EQT Corporation (EQT) ?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of EQT Corporation (NYSE:EQT) based on that data and determine whether they were really smart about the stock.

Is EQT Corporation (NYSE:EQT) a great investment right now? The best stock pickers were in an optimistic mood. The number of bullish hedge fund bets advanced by 1 recently. Our calculations also showed that EQT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. With all of this in mind let’s check out the latest hedge fund action surrounding EQT Corporation (NYSE:EQT).

What have hedge funds been doing with EQT Corporation (NYSE:EQT)?

Heading into the second quarter of 2020, a total of 30 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 3% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in EQT over the last 18 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, Citadel Investment Group held the most valuable stake in EQT Corporation (NYSE:EQT), which was worth $51.4 million at the end of the third quarter. On the second spot was Firefly Value Partners which amassed $36.4 million worth of shares. D E Shaw, Adage Capital Management, and Point72 Asset 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 Firefly Value Partners allocated the biggest weight to EQT Corporation (NYSE:EQT), around 6.87% of its 13F portfolio. Deep Basin Capital is also relatively very bullish on the stock, designating 2.66 percent of its 13F equity portfolio to EQT.

As aggregate interest increased, key hedge funds were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, established the most outsized position in EQT Corporation (NYSE:EQT). Point72 Asset Management had $19.8 million invested in the company at the end of the quarter. Till Bechtolsheimer’s Arosa Capital Management also made a $8.3 million investment in the stock during the quarter. The other funds with brand new EQT positions are Bruce Kovner’s Caxton Associates LP, Dmitry Balyasny’s Balyasny Asset Management, and Lee Ainslie’s Maverick Capital.

Let’s now take a look at hedge fund activity in other stocks similar to EQT Corporation (NYSE:EQT). We will take a look at CNO Financial Group Inc (NYSE:CNO), Vicor Corp (NASDAQ:VICR), Nelnet, Inc. (NYSE:NNI), and Graham Holdings Co (NYSE:GHC). All of these stocks’ market caps resemble EQT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CNO 15 218787 -8
VICR 14 31916 2
NNI 13 81943 -1
GHC 21 283866 3
Average 15.75 154128 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $234 million in EQT’s case. Graham Holdings Co (NYSE:GHC) is the most popular stock in this table. On the other hand Nelnet, Inc. (NYSE:NNI) 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 calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on EQT as the stock returned 68.3% in Q2 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.