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Did Hedge Funds Make The Right Call On EverQuote, Inc. (EVER) ?

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 EverQuote, Inc. (NASDAQ:EVER) and determine whether the smart money was really smart about this stock.

EverQuote, Inc. (NASDAQ:EVER) was in 23 hedge funds’ portfolios at the end of March. EVER investors should be aware of an increase in support from the world’s most elite money managers of late. There were 19 hedge funds in our database with EVER positions at the end of the previous quarter. Our calculations also showed that EVER 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.

To most traders, hedge funds are seen as unimportant, old financial tools of the past. While there are over 8000 funds trading today, We choose to focus on the top tier of this club, around 850 funds. These investment experts administer the majority of the smart money’s total asset base, and by observing their finest stock picks, Insider Monkey has brought to light numerous investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Richard Driehaus of Driehaus Capital

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. Keeping this in mind let’s analyze the latest hedge fund action encompassing EverQuote, Inc. (NASDAQ:EVER).

What does smart money think about EverQuote, Inc. (NASDAQ:EVER)?

Heading into the second quarter of 2020, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EVER over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of EverQuote, Inc. (NASDAQ:EVER), with a stake worth $26 million reported as of the end of September. Trailing Renaissance Technologies was G2 Investment Partners Management, which amassed a stake valued at $19.1 million. Shannon River Fund Management, Driehaus Capital, and D E Shaw 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 G2 Investment Partners Management allocated the biggest weight to EverQuote, Inc. (NASDAQ:EVER), around 6.31% of its 13F portfolio. Shannon River Fund Management is also relatively very bullish on the stock, designating 3.19 percent of its 13F equity portfolio to EVER.

As industrywide interest jumped, specific money managers have been driving this bullishness. Shannon River Fund Management, managed by Spencer M. Waxman, initiated the most outsized position in EverQuote, Inc. (NASDAQ:EVER). Shannon River Fund Management had $18.9 million invested in the company at the end of the quarter. Mark Coe’s Intrinsic Edge Capital also made a $2.6 million investment in the stock during the quarter. The following funds were also among the new EVER investors: Greg Eisner’s Engineers Gate Manager, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, and Bruce Kovner’s Caxton Associates LP.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as EverQuote, Inc. (NASDAQ:EVER) but similarly valued. These stocks are Veritex Holdings Inc (NASDAQ:VBTX), INMODE LTD. (NASDAQ:INMD), Homology Medicines, Inc. (NASDAQ:FIXX), and MFA Financial, Inc. (NYSE:MFA). This group of stocks’ market valuations resemble EVER’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VBTX 9 34975 -1
INMD 11 59841 4
FIXX 15 102298 6
MFA 16 25866 -3
Average 12.75 55745 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.75 hedge funds with bullish positions and the average amount invested in these stocks was $56 million. That figure was $111 million in EVER’s case. MFA Financial, Inc. (NYSE:MFA) is the most popular stock in this table. On the other hand Veritex Holdings Inc (NASDAQ:VBTX) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks EverQuote, Inc. (NASDAQ:EVER) 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 EVER as the stock returned 121.6% 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.