The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Everi Holdings Inc (NYSE:EVRI) and determine whether the smart money was really smart about this stock.
Everi Holdings Inc (NYSE:EVRI) has experienced a decrease in hedge fund interest in recent months. EVRI was in 24 hedge funds’ portfolios at the end of the first quarter of 2020. There were 30 hedge funds in our database with EVRI positions at the end of the previous quarter. Our calculations also showed that EVRI 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.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, on one site we found out that NBA champion Isiah Thomas is now the CEO of this cannabis company. The same site also talks about a snack manufacturer that’s growing at 30% annually. 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. 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 if you have any good ideas send us an email. With all of this in mind let’s analyze the recent hedge fund action regarding Everi Holdings Inc (NYSE:EVRI).
How are hedge funds trading Everi Holdings Inc (NYSE:EVRI)?
At the end of the first quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in EVRI a year ago. With the smart money’s capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
More specifically, Indaba Capital Management was the largest shareholder of Everi Holdings Inc (NYSE:EVRI), with a stake worth $14.5 million reported as of the end of September. Trailing Indaba Capital Management was Renaissance Technologies, which amassed a stake valued at $9.7 million. Private Capital Management, Millennium Management, and DG 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 Indaba Capital Management allocated the biggest weight to Everi Holdings Inc (NYSE:EVRI), around 7.8% of its 13F portfolio. DG Capital Management is also relatively very bullish on the stock, earmarking 6.89 percent of its 13F equity portfolio to EVRI.
Due to the fact that Everi Holdings Inc (NYSE:EVRI) has experienced falling interest from the smart money, we can see that there exists a select few hedgies who sold off their positions entirely in the first quarter. Intriguingly, Matthew Drapkin and Steven R. Becker’s Becker Drapkin Management sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, totaling an estimated $11.9 million in stock. Michael O’Keefe’s fund, 12th Street Asset Management, also sold off its stock, about $4.9 million worth. These moves are interesting, as total hedge fund interest dropped by 6 funds in the first quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Everi Holdings Inc (NYSE:EVRI) but similarly valued. We will take a look at XPEL Inc. (NASDAQ:XPEL), Chatham Lodging Trust (NYSE:CLDT), Napco Security Technologies Inc (NASDAQ:NSSC), and Crescent Capital BDC, Inc. (NASDAQ:CCAP). This group of stocks’ market values are closest to EVRI’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $59 million in EVRI’s case. XPEL Inc. (NASDAQ:XPEL) is the most popular stock in this table. On the other hand Napco Security Technologies Inc (NASDAQ:NSSC) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Everi Holdings Inc (NYSE:EVRI) 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 EVRI as the stock returned 56.4% 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.
Disclosure: None. This article was originally published at Insider Monkey.