How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Everi Holdings Inc (NYSE:EVRI).
Everi Holdings Inc (NYSE:EVRI) was in 31 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. EVRI investors should pay attention to an increase in enthusiasm from smart money recently. There were 24 hedge funds in our database with EVRI positions at the end of the first quarter. Our calculations also showed that EVRI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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.
Richard Driehaus of Driehaus Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium 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. Keeping this in mind let’s take a look at the recent hedge fund action surrounding Everi Holdings Inc (NYSE:EVRI).
Do Hedge Funds Think EVRI Is A Good Stock To Buy Now?
At Q2’s end, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in EVRI a year ago. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, Driehaus Capital was the largest shareholder of Everi Holdings Inc (NYSE:EVRI), with a stake worth $45.4 million reported as of the end of June. Trailing Driehaus Capital was Two Sigma Advisors, which amassed a stake valued at $36.9 million. Private Capital Management, Arrowstreet Capital, and Intrinsic Edge Capital 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 DG Capital Management allocated the biggest weight to Everi Holdings Inc (NYSE:EVRI), around 5.02% of its 13F portfolio. Private Capital Management is also relatively very bullish on the stock, earmarking 4.92 percent of its 13F equity portfolio to EVRI.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Simcoe Capital Management, managed by Jeffrey Jacobowitz, established the most valuable position in Everi Holdings Inc (NYSE:EVRI). Simcoe Capital Management had $22.2 million invested in the company at the end of the quarter. Seth Wunder’s Black-and-White Capital also initiated a $9.5 million position during the quarter. The following funds were also among the new EVRI investors: Sheetal Sharma’s Collaborative Holdings Management, Mark Broach’s Manatuck Hill Partners, and Peter A. Wright’s P.A.W. CAPITAL PARTNERS.
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 Echostar Corporation (NASDAQ:SATS), KAR Auction Services Inc (NYSE:KAR), Victory Capital Holdings, Inc. (NASDAQ:VCTR), Seres Therapeutics Inc (NASDAQ:MCRB), Ligand Pharmaceuticals Inc. (NASDAQ:LGND), Kymera Therapeutics, Inc. (NASDAQ:KYMR), and TechTarget Inc (NASDAQ:TTGT). This group of stocks’ market values match EVRI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SATS | 26 | 246543 | -2 |
| KAR | 23 | 284975 | 1 |
| VCTR | 14 | 83647 | 0 |
| MCRB | 16 | 271391 | -3 |
| LGND | 7 | 55674 | -6 |
| KYMR | 21 | 448831 | 5 |
| TTGT | 14 | 118269 | -3 |
| Average | 17.3 | 215619 | -1.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.3 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was $319 million in EVRI’s case. Echostar Corporation (NASDAQ:SATS) is the most popular stock in this table. On the other hand Ligand Pharmaceuticals Inc. (NASDAQ:LGND) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Everi Holdings Inc (NYSE:EVRI) is more popular among hedge funds. Our overall hedge fund sentiment score for EVRI is 90. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately EVRI wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on EVRI were disappointed as the stock returned -4.1% since the end of the second quarter (through 10/15) 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 most of these stocks already outperformed the market since 2019.
Follow Everi Holdings Inc. (NYSE:EVRI)
Follow Everi Holdings Inc. (NYSE:EVRI)
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Disclosure: None. This article was originally published at Insider Monkey.
