Hedge Fund Sentiment Is Stagnant On Euronet Worldwide, Inc. (EEFT)

In this article you are going to find out whether hedge funds think Euronet Worldwide, Inc. (NASDAQ:EEFT) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Hedge fund interest in Euronet Worldwide, Inc. (NASDAQ:EEFT) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EEFT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). At the end of this article we will also compare EEFT to other stocks including Change Healthcare Inc. (NASDAQ:CHNG), Nikola Corporation (NASDAQ:NKLA), and Toll Brothers Inc (NYSE:TOL) to get a better sense of its popularity.

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 79 percentage points since March 2017 (see the details here). 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, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a glance at the fresh hedge fund action surrounding Euronet Worldwide, Inc. (NASDAQ:EEFT).

Do Hedge Funds Think EEFT Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 40 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 37 hedge funds held shares or bullish call options in EEFT a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Euronet Worldwide, Inc. (NASDAQ:EEFT) was held by Joho Capital, which reported holding $63.6 million worth of stock at the end of June. It was followed by Cardinal Capital with a $44 million position. Other investors bullish on the company included Point72 Asset Management, Arrowstreet Capital, and Crosslink Capital. In terms of the portfolio weights assigned to each position Joho Capital allocated the biggest weight to Euronet Worldwide, Inc. (NASDAQ:EEFT), around 9.04% of its 13F portfolio. Crosslink Capital is also relatively very bullish on the stock, earmarking 4.83 percent of its 13F equity portfolio to EEFT.

Because Euronet Worldwide, Inc. (NASDAQ:EEFT) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of money managers that decided to sell off their positions entirely heading into Q3. Intriguingly, Ryan Frick and Oliver Evans’s Dorsal Capital Management sold off the biggest stake of the 750 funds tracked by Insider Monkey, totaling about $94 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund dumped about $7.6 million worth. These moves are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks similar to Euronet Worldwide, Inc. (NASDAQ:EEFT). We will take a look at Change Healthcare Inc. (NASDAQ:CHNG), Nikola Corporation (NASDAQ:NKLA), Toll Brothers Inc (NYSE:TOL), Cullen/Frost Bankers, Inc. (NYSE:CFR), Axalta Coating Systems Ltd (NYSE:AXTA), Digital Turbine Inc (NASDAQ:APPS), and Ascendis Pharma A/S (NASDAQ:ASND). This group of stocks’ market valuations are similar to EEFT’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.6 hedge funds with bullish positions and the average amount invested in these stocks was $1024 million. That figure was $369 million in EEFT’s case. Change Healthcare Inc. (NASDAQ:CHNG) is the most popular stock in this table. On the other hand Nikola Corporation (NASDAQ:NKLA) is the least popular one with only 12 bullish hedge fund positions. Euronet Worldwide, Inc. (NASDAQ:EEFT) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EEFT is 66.4. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 21.8% in 2021 through October 11th and beat the market again by 4.4 percentage points. Unfortunately EEFT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EEFT were disappointed as the stock returned -7.2% since the end of June (through 10/11) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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