Hedge Funds Have Never Been More Bullish On Evolution Petroleum Corporation (EPM)

The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Evolution Petroleum Corporation (NYSEAMEX:EPM).

Is Evolution Petroleum Corporation (NYSEAMEX:EPM) a buy right now? Prominent investors are getting more bullish. The number of long hedge fund bets advanced by 2 in recent months. Our calculations also showed that EPM isn’t among the 30 most popular stocks among hedge funds. EPM was in 14 hedge funds’ portfolios at the end of the first quarter of 2019. There were 12 hedge funds in our database with EPM holdings at the end of the previous quarter.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Roger Ibbotson Zebra Capital

Let’s review the latest hedge fund action encompassing Evolution Petroleum Corporation (NYSEAMEX:EPM).

Hedge fund activity in Evolution Petroleum Corporation (NYSEAMEX:EPM)

Heading into the second quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EPM over the last 15 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).


The largest stake in Evolution Petroleum Corporation (NYSEAMEX:EPM) was held by Renaissance Technologies, which reported holding $14.1 million worth of stock at the end of March. It was followed by D E Shaw with a $1.9 million position. Other investors bullish on the company included AQR Capital Management, GLG Partners, and Arrowstreet Capital.

As aggregate interest increased, key hedge funds were breaking ground themselves. Winton Capital Management, managed by David Harding, created the biggest position in Evolution Petroleum Corporation (NYSEAMEX:EPM). Winton Capital Management had $0.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $0.1 million position during the quarter. The following funds were also among the new EPM investors: Roger Ibbotson’s Zebra Capital Management and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Evolution Petroleum Corporation (NYSEAMEX:EPM) but similarly valued. These stocks are BG Staffing Inc (NYSEAMEX:BGSF), RCI Hospitality Holdings, Inc. (NASDAQ:RICK), Yatra Online, Inc. (NASDAQ:YTRA), and Spero Therapeutics, Inc. (NASDAQ:SPRO). All of these stocks’ market caps are similar to EPM’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BGSF 7 7386 1
RICK 8 23579 2
YTRA 9 41332 1
SPRO 7 35021 2
Average 7.75 26830 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 7.75 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $22 million in EPM’s case. Yatra Online, Inc. (NASDAQ:YTRA) is the most popular stock in this table. On the other hand BG Staffing Inc (NYSEAMEX:BGSF) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Evolution Petroleum Corporation (NYSEAMEX:EPM) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately EPM wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EPM were disappointed as the stock returned 0.7% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.

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