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.
We’re going to view the latest hedge fund action surrounding Evergy, Inc. (NYSE:EVRG).
What have hedge funds been doing with Evergy, Inc. (NYSE:EVRG)?
At Q4’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards EVRG over the last 14 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
The largest stake in Evergy, Inc. (NYSE:EVRG) was held by Renaissance Technologies, which reported holding $391.6 million worth of stock at the end of September. It was followed by Zimmer Partners with a $211.4 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and Carlson Capital.
As aggregate interest increased, specific money managers have jumped into Evergy, Inc. (NYSE:EVRG) headfirst. Tudor Investment Corp, managed by Paul Tudor Jones, created the biggest position in Evergy, Inc. (NYSE:EVRG). Tudor Investment Corp had $4.2 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also made a $3.4 million investment in the stock during the quarter. The other funds with brand new EVRG positions are Benjamin A. Smith’s Laurion Capital Management, Ian Simm’s Impax Asset Management, and Claes Fornell’s CSat Investment Advisory.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Evergy, Inc. (NYSE:EVRG) but similarly valued. These stocks are Freeport-McMoRan Inc. (NYSE:FCX), DXC Technology Company (NYSE:DXC), Total System Services, Inc. (NYSE:TSS), and American Airlines Group Inc (NASDAQ:AAL). All of these stocks’ market caps are similar to EVRG’s market cap.
|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 41.5 hedge funds with bullish positions and the average amount invested in these stocks was $1654 million. That figure was $1246 million in EVRG’s case. American Airlines Group Inc (NASDAQ:AAL) is the most popular stock in this table. On the other hand Total System Services, Inc. (NYSE:TSS) is the least popular one with only 35 bullish hedge fund positions. Compared to these stocks Evergy, Inc. (NYSE:EVRG) is even less popular than TSS. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately EVRG wasn’t in this group. Hedge funds that bet on EVRG were disappointed as the stock returned 2.5% and underperformed the market. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.