At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Euronet Worldwide, Inc. (NASDAQ:EEFT).
Is EEFT a good stock to buy now? The best stock pickers were turning bullish. The number of bullish hedge fund positions increased by 2 in recent months. Euronet Worldwide, Inc. (NASDAQ:EEFT) was in 39 hedge funds’ portfolios at the end of September. The all time high for this statistic is 47. Our calculations also showed that EEFT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
If you’d ask most market participants, hedge funds are perceived as underperforming, outdated investment vehicles of yesteryear. While there are greater than 8000 funds trading at the moment, Our experts look at the crème de la crème of this group, about 850 funds. It is estimated that this group of investors shepherd bulk of all hedge funds’ total asset base, and by paying attention to their top stock picks, Insider Monkey has figured out a number of investment strategies that have historically defeated the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Keeping this in mind let’s go over the recent hedge fund action regarding Euronet Worldwide, Inc. (NASDAQ:EEFT).
Do Hedge Funds Think EEFT Is A Good Stock To Buy Now?
At Q3’s end, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in EEFT over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Euronet Worldwide, Inc. (NASDAQ:EEFT) was held by Dorsal Capital Management, which reported holding $73.2 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $51.6 million position. Other investors bullish on the company included Balyasny Asset Management, Joho Capital, and D E Shaw. In terms of the portfolio weights assigned to each position Dorsal Capital Management allocated the biggest weight to Euronet Worldwide, Inc. (NASDAQ:EEFT), around 5.65% of its 13F portfolio. Joho Capital is also relatively very bullish on the stock, designating 5.25 percent of its 13F equity portfolio to EEFT.
Consequently, some big names have jumped into Euronet Worldwide, Inc. (NASDAQ:EEFT) headfirst. Joho Capital, managed by Robert Karr, initiated the most outsized position in Euronet Worldwide, Inc. (NASDAQ:EEFT). Joho Capital had $26 million invested in the company at the end of the quarter. Michael Rockefeller and KarláKroeker’s Woodline Partners also made a $15.8 million investment in the stock during the quarter. The other funds with new positions in the stock are Amy Minella’s Cardinal Capital, Philip Hilal’s Clearfield Capital, and Mark Coe’s Intrinsic Edge Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Euronet Worldwide, Inc. (NASDAQ:EEFT) but similarly valued. We will take a look at Choice Hotels International, Inc. (NYSE:CHH), Enel Chile S.A. (NYSE:ENIC), Diamondback Energy Inc (NASDAQ:FANG), KT Corporation (NYSE:KT), Norwegian Cruise Line Holdings Ltd (NASDAQ:NCLH), Wyndham Hotels & Resorts, Inc. (NYSE:WH), and FLIR Systems, Inc. (NASDAQ:FLIR). This group of stocks’ market values resemble EEFT’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $218 million. That figure was $396 million in EEFT’s case. Wyndham Hotels & Resorts, Inc. (NYSE:WH) is the most popular stock in this table. On the other hand Enel Chile S.A. (NYSE:ENIC) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Euronet Worldwide, Inc. (NASDAQ:EEFT) is more popular among hedge funds. Our overall hedge fund sentiment score for EEFT is 81.9. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 percentage points. These stocks returned 33.3% in 2020 through December 18th but still managed to beat the market by 16.4 percentage points. Hedge funds were also right about betting on EEFT as the stock returned 58.7% since the end of September (through 12/18) 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.
Disclosure: None. This article was originally published at Insider Monkey.