Hedge Funds Dropped The Ball On EVO Payments, Inc. (EVOP)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of EVO Payments, Inc. (NASDAQ:EVOP) based on that data and determine whether they were really smart about the stock.

Is EVO Payments, Inc. (NASDAQ:EVOP) an attractive investment now? Money managers were taking a pessimistic view. The number of bullish hedge fund positions fell by 12 recently. Our calculations also showed that EVOP 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.

If you’d ask most shareholders, hedge funds are seen as slow, outdated financial tools of years past. While there are more than 8000 funds in operation today, Our experts look at the bigwigs of this club, about 850 funds. Most estimates calculate that this group of people direct most of the hedge fund industry’s total asset base, and by keeping track of their unrivaled equity investments, Insider Monkey has unearthed numerous investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a 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 .


Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a glance at the fresh hedge fund action regarding EVO Payments, Inc. (NASDAQ:EVOP).

What have hedge funds been doing with EVO Payments, Inc. (NASDAQ:EVOP)?

At Q1’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -55% from the fourth quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in EVOP a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Is EVOP A Good Stock To Buy?

The largest stake in EVO Payments, Inc. (NASDAQ:EVOP) was held by Greenhouse Funds, which reported holding $13.9 million worth of stock at the end of September. It was followed by Islet Management with a $6.1 million position. Other investors bullish on the company included Citadel Investment Group, Two Sigma Advisors, and D E Shaw. In terms of the portfolio weights assigned to each position Greenhouse Funds allocated the biggest weight to EVO Payments, Inc. (NASDAQ:EVOP), around 3.38% of its 13F portfolio. Islet Management is also relatively very bullish on the stock, setting aside 0.89 percent of its 13F equity portfolio to EVOP.

Seeing as EVO Payments, Inc. (NASDAQ:EVOP) has experienced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few hedgies that slashed their positions entirely last quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the largest investment of the 750 funds watched by Insider Monkey, totaling close to $10.2 million in stock, and Greg Poole’s Echo Street Capital Management was right behind this move, as the fund sold off about $9.5 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 12 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to EVO Payments, Inc. (NASDAQ:EVOP). These stocks are Minerals Technologies Inc (NYSE:MTX), Walker & Dunlop Inc. (NYSE:WD), MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI), and PRA Group, Inc. (NASDAQ:PRAA). This group of stocks’ market caps are similar to EVOP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MTX 16 67403 2
WD 19 53136 -6
MTSI 16 153392 -2
PRAA 14 51314 2
Average 16.25 81311 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $81 million. That figure was $33 million in EVOP’s case. Walker & Dunlop Inc. (NYSE:WD) is the most popular stock in this table. On the other hand PRA Group, Inc. (NASDAQ:PRAA) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks EVO Payments, Inc. (NASDAQ:EVOP) is even less popular than PRAA. Hedge funds clearly dropped the ball on EVOP as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 gained 12.3% in 2020 through June 30th and still beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on EVOP as the stock returned 49.2% in the second quarter and outperformed the market by an even larger margin.

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