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 Evertec Inc (NYSE:EVTC).
Evertec Inc (NYSE:EVTC) shareholders have witnessed an increase in hedge fund sentiment recently. EVTC was in 24 hedge funds’ portfolios at the end of the third quarter of 2019. There were 22 hedge funds in our database with EVTC positions at the end of the previous quarter. Our calculations also showed that EVTC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most shareholders, hedge funds are viewed as underperforming, outdated financial vehicles of years past. While there are greater than 8000 funds with their doors open at the moment, Our experts choose to focus on the crème de la crème of this group, around 750 funds. These investment experts command most of the hedge fund industry’s total asset base, and by following their top equity investments, Insider Monkey has come up with several investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Noam Gottesman of GLG Partners
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to analyze the latest hedge fund action surrounding Evertec Inc (NYSE:EVTC).
What does smart money think about Evertec Inc (NYSE:EVTC)?
Heading into the fourth quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 9% from the second quarter of 2019. On the other hand, there were a total of 20 hedge funds with a bullish position in EVTC a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
More specifically, Rivulet Capital was the largest shareholder of Evertec Inc (NYSE:EVTC), with a stake worth $79.2 million reported as of the end of September. Trailing Rivulet Capital was Renaissance Technologies, which amassed a stake valued at $76 million. GLG Partners, Arrowstreet Capital, and AQR Capital 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 Rivulet Capital allocated the biggest weight to Evertec Inc (NYSE:EVTC), around 8.99% of its portfolio. BeaconLight Capital is also relatively very bullish on the stock, setting aside 2.44 percent of its 13F equity portfolio to EVTC.
As one would reasonably expect, specific money managers were breaking ground themselves. Paloma Partners, managed by Donald Sussman, created the largest position in Evertec Inc (NYSE:EVTC). Paloma Partners had $0.9 million invested in the company at the end of the quarter. Brandon Haley’s Holocene Advisors also made a $0.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Michael Gelband’s ExodusPoint Capital, and Ronald Hua’s Qtron Investments.
Let’s check out hedge fund activity in other stocks similar to Evertec Inc (NYSE:EVTC). We will take a look at Iovance Biotherapeutics, Inc. (NASDAQ:IOVA), Afya Limited (NASDAQ:AFYA), Guangshen Railway Company Limited (NYSE:GSH), and United Community Banks Inc (NASDAQ:UCBI). This group of stocks’ market values match EVTC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IOVA | 28 | 897726 | 6 |
| AFYA | 7 | 66858 | 7 |
| GSH | 2 | 4202 | 1 |
| UCBI | 13 | 50527 | 1 |
| Average | 12.5 | 254828 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $255 million. That figure was $262 million in EVTC’s case. Iovance Biotherapeutics, Inc. (NASDAQ:IOVA) is the most popular stock in this table. On the other hand Guangshen Railway Company Limited (NYSE:GSH) is the least popular one with only 2 bullish hedge fund positions. Evertec Inc (NYSE:EVTC) is not the most popular stock in this group but hedge fund interest is still above average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately EVTC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EVTC were disappointed as the stock returned 4% during the fourth quarter (through the end of November) 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 many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
