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 Emerald Holding, Inc. (NYSE:EEX).
Is Emerald Holding (EEX) a good stock to buy now? EEX was in 6 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 15. EEX shareholders have witnessed a decrease in hedge fund sentiment in recent months. There were 8 hedge funds in our database with EEX holdings at the end of June. Our calculations also showed that EEX 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.
At the moment there are tons of methods stock market investors can use to value stocks. A pair of the most underrated methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the top picks of the elite fund managers can outpace the S&P 500 by a significant amount (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. With all of this in mind we’re going to take a look at the fresh hedge fund action surrounding Emerald Holding, Inc. (NYSE:EEX).
Hedge fund activity in Emerald Holding, Inc. (NYSE:EEX)
Heading into the fourth quarter of 2020, a total of 6 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in EEX a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, D E Shaw held the most valuable stake in Emerald Holding, Inc. (NYSE:EEX), which was worth $0.5 million at the end of the third quarter. On the second spot was Invenomic Capital Management which amassed $0.5 million worth of shares. Renaissance Technologies, Winton Capital Management, and Paloma Partners 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 Invenomic Capital Management allocated the biggest weight to Emerald Holding, Inc. (NYSE:EEX), around 0.26% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to EEX.
Judging by the fact that Emerald Holding, Inc. (NYSE:EEX) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of money managers that decided to sell off their entire stakes in the third quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest investment of the 750 funds tracked by Insider Monkey, comprising close to $0.4 million in stock. Roger Ibbotson’s fund, Zebra Capital Management, also cut its stock, about $0.1 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Emerald Holding, Inc. (NYSE:EEX) but similarly valued. We will take a look at Monroe Capital Corp (NASDAQ:MRCC), Lincoln Educational Services Corporation (NASDAQ:LINC), comScore, Inc. (NASDAQ:SCOR), American Realty Investors, Inc. (NYSE:ARL), Bel Fuse, Inc. (NASDAQ:BELFA), Lyra Therapeutics, Inc. (NASDAQ:LYRA), and Western New England Bancorp, Inc. (NASDAQ:WNEB). This group of stocks’ market values resemble EEX’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 6 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $2 million in EEX’s case. comScore, Inc. (NASDAQ:SCOR) is the most popular stock in this table. On the other hand American Realty Investors, Inc. (NYSE:ARL) is the least popular one with only 1 bullish hedge fund positions. Emerald Holding, Inc. (NYSE:EEX) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EEX is 35.8. 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 gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on EEX as the stock returned 127.5% since the end of the third quarter (through 11/27) and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.