Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards EQT Corporation (NYSE:EQT) to find out whether there were any major changes in hedge funds’ views.
Is EQT stock a buy or sell? EQT Corporation (NYSE:EQT) shareholders have witnessed an increase in support from the world’s most elite money managers recently. EQT Corporation (NYSE:EQT) was in 43 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 50. There were 39 hedge funds in our database with EQT positions at the end of the third quarter. Our calculations also showed that EQT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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 10 best battery stocks to buy to identify the next stock with 10x upside potential. 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 view the new hedge fund action regarding EQT Corporation (NYSE:EQT).
Do Hedge Funds Think EQT Is A Good Stock To Buy Now?
At Q4’s end, a total of 43 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EQT over the last 22 quarters. So, let’s examine 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, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in EQT Corporation (NYSE:EQT). Arrowstreet Capital has a $52.1 million position in the stock, comprising 0.1% of its 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which holds a $32.7 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism encompass David Tepper’s Appaloosa Management LP, Matt Smith’s Deep Basin Capital and Scott Bessent’s Key Square Capital Management. In terms of the portfolio weights assigned to each position Quaker Capital Investments allocated the biggest weight to EQT Corporation (NYSE:EQT), around 8.02% of its 13F portfolio. Key Square Capital Management is also relatively very bullish on the stock, earmarking 6.15 percent of its 13F equity portfolio to EQT.
As one would reasonably expect, key money managers were leading the bulls’ herd. Appaloosa Management LP, managed by David Tepper, assembled the largest position in EQT Corporation (NYSE:EQT). Appaloosa Management LP had $27.9 million invested in the company at the end of the quarter. Matt Smith’s Deep Basin Capital also initiated a $26.2 million position during the quarter. The other funds with new positions in the stock are Phill Gross and Robert Atchinson’s Adage Capital Management, Gregory Fraser, Rudolph Kluiber, and Timothy Krochuk’s GRT Capital Partners, and Steve Cohen’s Point72 Asset Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as EQT Corporation (NYSE:EQT) but similarly valued. These stocks are Sterling Bancorp (NYSE:STL), Visteon Corp (NYSE:VC), Macy’s, Inc. (NYSE:M), Jamf Holding Corp. (NASDAQ:JAMF), Norbord Inc. (NYSE:OSB), AAON, Inc. (NASDAQ:AAON), and Equitrans Midstream Corporation (NYSE:ETRN). This group of stocks’ market caps are closest to EQT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 22.1 hedge funds with bullish positions and the average amount invested in these stocks was $634 million. That figure was $355 million in EQT’s case. Macy’s, Inc. (NYSE:M) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks EQT Corporation (NYSE:EQT) is more popular among hedge funds. Our overall hedge fund sentiment score for EQT is 84.8. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on EQT as the stock returned 45.3% since the end of December (through 3/19) 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.
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Disclosure: None. This article was originally published at Insider Monkey.