Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: EverBank Financial Corp (NYSE:EVER).
EverBank Financial Corp (NYSE:EVER) was in 16 hedge funds’ portfolios at the end of the third quarter of 2016. EVER has experienced an increase in support from the world’s most successful money managers of late. There were 9 hedge funds in our database with EVER positions at the end of the previous quarter. At the end of this article we will also compare EVER to other stocks including BGC Partners, Inc. (NASDAQ:BGCP), Eastgroup Properties Inc (NYSE:EGP), and LendingClub Corp (NYSE:LC) to get a better sense of its popularity.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.
Hedge fund activity in EverBank Financial Corp (NYSE:EVER)
At Q3’s end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 78% surge from one quarter earlier, pushing hedge fund ownership far above its highs of the past year. There were a total of 10 hedge funds with a bullish position in EVER at the beginning of this year. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Edward Gilhuly and Scott Stuart’s Sageview Capital has the most valuable position in EverBank Financial Corp (NYSE:EVER), worth close to $199.6 million, corresponding to 82.2% of its total 13F portfolio. The second largest stake is held by Alec Litowitz and Ross Laser of Magnetar Capital, with a $92.5 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish encompass Robert Emil Zoellner’s Alpine Associates, Mariko Gordon’s Daruma Asset Management, and Renaissance Technologies, one of the largest hedge funds in the world. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, some big names have been driving this bullishness. Magnetar Capital established the most valuable position in EverBank Financial Corp (NYSE:EVER). Alpine Associates also initiated a $72.4 million position during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’ Tudor Investment Corp, Matthew Tewksbury’s Stevens Capital Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s go over hedge fund activity in other stocks similar to EverBank Financial Corp (NYSE:EVER). These stocks are BGC Partners, Inc. (NASDAQ:BGCP), Eastgroup Properties Inc (NYSE:EGP), LendingClub Corp (NYSE:LC), and Diamond Offshore Drilling Inc (NYSE:DO). This group of stocks’ market values match EVER’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $127 million. That figure was $510 million in EVER’s case. LendingClub Corp (NYSE:LC) is the most popular stock in this table. On the other hand Eastgroup Properties Inc (NYSE:EGP) is the least popular one with only 8 bullish hedge fund positions. EverBank Financial Corp (NYSE:EVER) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LC might be a better candidate to consider taking a long position in.