Here’s What Hedge Funds Think About Evertec Inc (EVTC)

Does Evertec Inc (NYSE:EVTC) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on satellite photos and other research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail inconceivably on some occasions, but net net their stock picks have been generating superior risk-adjusted returns on average over the years.

Is Evertec Inc (NYSE:EVTC) a cheap investment now? Investors who are in the know are taking an optimistic view. The number of bullish hedge fund bets increased by 1 recently. Our calculations also showed that evtc isn’t among the 30 most popular stocks among hedge funds. EVTC was in 21 hedge funds’ portfolios at the end of December. There were 20 hedge funds in our database with EVTC holdings at the end of the previous quarter.

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 32 percentage points since May 2014 through March 12, 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. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.


Cliff Asness of AQR Capital Management

Let’s take a look at the new hedge fund action regarding Evertec Inc (NYSE:EVTC).

Hedge fund activity in Evertec Inc (NYSE:EVTC)

At the end of the fourth quarter, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EVTC over the last 14 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with EVTC Positions

More specifically, Renaissance Technologies was the largest shareholder of Evertec Inc (NYSE:EVTC), with a stake worth $52.9 million reported as of the end of September. Trailing Renaissance Technologies was Rivulet Capital, which amassed a stake valued at $47.6 million. GLG Partners, Millennium Management, and AQR Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.

Now, specific money managers have jumped into Evertec Inc (NYSE:EVTC) headfirst. Balyasny Asset Management, managed by Dmitry Balyasny, assembled the most valuable position in Evertec Inc (NYSE:EVTC). Balyasny Asset Management had $13.8 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $11.8 million position during the quarter. The other funds with new positions in the stock are Richard Driehaus’s Driehaus Capital, Bernard Horn’s Polaris Capital Management, and Jeffrey Hoffner’s Engle Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Evertec Inc (NYSE:EVTC) but similarly valued. These stocks are Sogou Inc. (NYSE:SOGO), Colliers International Group Inc (NASDAQ:CIGI), Antero Midstream Corporation (NYSE:AMGP), and Terreno Realty Corporation (NYSE:TRNO). This group of stocks’ market valuations are closest to EVTC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SOGO 6 9668 0
CIGI 13 540066 2
AMGP 15 168765 -2
TRNO 10 29454 -2
Average 11 186988 -0.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $187 million. That figure was $224 million in EVTC’s case. Antero Midstream Corporation (NYSE:AMGP) is the most popular stock in this table. On the other hand Sogou Inc. (NYSE:SOGO) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Evertec Inc (NYSE:EVTC) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately EVTC wasn’t nearly as popular as these 15 stock and hedge funds that were betting on EVTC were disappointed as the stock returned 5.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

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