Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Is Everi Holdings Inc (NYSE:EVRI) ready to rally soon? Prominent investors are surely becoming hopeful. The number of bullish hedge fund positions that are disclosed in regulatory 13F filings grew by 1 recently. EVRI was in 18 hedge funds’ portfolios at the end of September. There were 17 hedge funds in our database with EVRI positions at the end of the previous quarter. At the end of this article we will also compare EVRI to other stocks including Vectrus Inc (NYSE:VEC), Sientra Inc (NASDAQ:SIEN), and RealNetworks Inc (NASDAQ:RNWK) to get a better sense of its popularity.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
What does the smart money think about Everi Holdings Inc (NYSE:EVRI)?
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey were bullish on this stock, a gain of 6% from one quarter earlier. On the other hand, there were a total of 15 hedge funds with a bullish position in EVRI at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Archer Capital Management, led by Eric Edidin and Josh Lobel, holds the most valuable position in Everi Holdings Inc (NYSE:EVRI). Archer Capital Management has a $12 million position in the stock, comprising 3% of its 13F portfolio. Sitting at the No. 2 spot is Private Capital Management, led by Gregg J. Powers, holding a $9.2 million position; the fund has 1.4% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism encompass Derek C. Schrier’s Indaba Capital Management, Didric Cederholm’s Lion Point and Jim Simons’ Renaissance Technologies. We should note that two of these hedge funds (Archer Capital Management and Lion Point) are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, key money managers have been driving this bullishness. Kavi Asset Management, led by Manoneet Singh, assembled the most valuable position in Everi Holdings Inc (NYSE:EVRI). Kavi Asset Management had $1.3 million invested in the company at the end of the quarter. Steve Ketchum’s Sound Point Capital also made a $1 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Ken Griffin’s Citadel Investment Group, and Chao Ku’s Nine Chapters Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Everi Holdings Inc (NYSE:EVRI) but similarly valued. These stocks are Vectrus Inc (NYSE:VEC), Sientra Inc (NASDAQ:SIEN), RealNetworks Inc (NASDAQ:RNWK), and Orrstown Financial Services (NASDAQ:ORRF). All of these stocks’ market caps resemble EVRI’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $29 million. That figure was $47 million in EVRI’s case. Vectrus Inc (NYSE:VEC) is the most popular stock in this table. On the other hand Orrstown Financial Services (NASDAQ:ORRF) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Everi Holdings Inc (NYSE:EVRI) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.