We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 835 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Everbridge, Inc. (NASDAQ:EVBG) in this article.
Is Everbridge, Inc. (NASDAQ:EVBG) a buy, sell, or hold? Money managers are taking a bullish view. The number of long hedge fund positions went up by 5 in recent months. Our calculations also showed that EVBG isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 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 more than 41 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s take a look at the recent hedge fund action regarding Everbridge, Inc. (NASDAQ:EVBG).
How have hedgies been trading Everbridge, Inc. (NASDAQ:EVBG)?
Heading into the first quarter of 2020, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EVBG over the last 18 quarters. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings significantly (or already accumulated large positions).
More specifically, Select Equity Group was the largest shareholder of Everbridge, Inc. (NASDAQ:EVBG), with a stake worth $209.3 million reported as of the end of September. Trailing Select Equity Group was Sylebra Capital Management, which amassed a stake valued at $104.4 million. Polar Capital, Valinor Management LLC, and Motley Fool Asset Management 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 Cota Capital allocated the biggest weight to Everbridge, Inc. (NASDAQ:EVBG), around 8.77% of its 13F portfolio. Sylebra Capital Management is also relatively very bullish on the stock, designating 4.1 percent of its 13F equity portfolio to EVBG.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Cota Capital, managed by Bobby Yazdani and Babak Poushanchi, assembled the most valuable position in Everbridge, Inc. (NASDAQ:EVBG). Cota Capital had $15.8 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $3.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Andrew Weiss’s Weiss Asset Management, Robert Henry Lynch’s Aristeia Capital, and David Costen Haley’s HBK Investments.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Everbridge, Inc. (NASDAQ:EVBG) but similarly valued. These stocks are New Fortress Energy LLC (NASDAQ:NFE), BioScrip Inc. (NASDAQ:BIOS), HB Fuller Co (NYSE:FUL), and Integer Holdings Corporation (NYSE:ITGR). This group of stocks’ market caps are similar to EVBG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NFE | 1 | 26125 | -3 |
| BIOS | 14 | 85606 | -4 |
| FUL | 14 | 207147 | -2 |
| ITGR | 20 | 178198 | 3 |
| Average | 12.25 | 124269 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $565 million in EVBG’s case. Integer Holdings Corporation (NYSE:ITGR) is the most popular stock in this table. On the other hand New Fortress Energy LLC (NASDAQ:NFE) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Everbridge, Inc. (NASDAQ:EVBG) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but still managed to beat the market by 5.5 percentage points. Hedge funds were also right about betting on EVBG as the stock returned 41.7% so far in Q1 (through March 25th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
