Is EVTC A Good Stock To Buy According To Hedge Funds?

In this article we will take a look at whether hedge funds think Evertec Inc (NYSE:EVTC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is EVTC a good stock to buy now? Evertec Inc (NYSE:EVTC) was in 21 hedge funds’ portfolios at the end of September. The all time high for this statistic is 26. EVTC has experienced an increase in activity from the world’s largest hedge funds of late. There were 18 hedge funds in our database with EVTC holdings at the end of June. Our calculations also showed that EVTC 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.

In the eyes of most shareholders, hedge funds are perceived as slow, old financial vehicles of the past. While there are more than 8000 funds with their doors open today, We look at the crème de la crème of this group, approximately 850 funds. These money managers have their hands on the lion’s share of the smart money’s total capital, and by watching their highest performing equity investments, Insider Monkey has deciphered many investment strategies that have historically exceeded the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per year 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 .

Matthew Halbower Pentwater Capital

Matthew Halbower of Pentwater Capital

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. Now let’s review the new hedge fund action encompassing Evertec Inc (NYSE:EVTC).

Do Hedge Funds Think EVTC Is A Good Stock To Buy Now?

At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the second quarter of 2020. By comparison, 26 hedge funds held shares or bullish call options in EVTC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Evertec Inc (NYSE:EVTC) was held by Rivulet Capital, which reported holding $124 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $69.4 million position. Other investors bullish on the company included GLG Partners, Millennium Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position Rivulet Capital allocated the biggest weight to Evertec Inc (NYSE:EVTC), around 6.75% of its 13F portfolio. White Square Capital is also relatively very bullish on the stock, designating 3.3 percent of its 13F equity portfolio to EVTC.

As aggregate interest increased, key hedge funds have been driving this bullishness. Pentwater Capital Management, managed by Matthew Halbower, initiated the most valuable position in Evertec Inc (NYSE:EVTC). Pentwater Capital Management had $12.9 million invested in the company at the end of the quarter. Ravi Chopra’s Azora Capital also initiated a $9 million position during the quarter. The other funds with brand new EVTC positions are Himanshu Gulati’s Antara Capital, Gregg Moskowitz’s Interval Partners, and Florian Kronawitter’s White Square Capital.

Let’s go over hedge fund activity in other stocks similar to Evertec Inc (NYSE:EVTC). These stocks are NuVasive, Inc. (NASDAQ:NUVA), Evoqua Water Technologies Corp. (NYSE:AQUA), Cimarex Energy Co (NYSE:XEC), Pluralsight, Inc. (NASDAQ:PS), Teradata Corporation (NYSE:TDC), Opko Health Inc. (NASDAQ:OPK), and Sprouts Farmers Market Inc (NASDAQ:SFM). This group of stocks’ market caps are similar to EVTC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NUVA 26 335263 -7
AQUA 21 216210 4
XEC 38 563605 -1
PS 24 183954 -3
TDC 33 342569 2
OPK 11 26649 -5
SFM 27 427544 2
Average 25.7 299399 -1.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 25.7 hedge funds with bullish positions and the average amount invested in these stocks was $299 million. That figure was $317 million in EVTC’s case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table. On the other hand Opko Health Inc. (NASDAQ:OPK) is the least popular one with only 11 bullish hedge fund positions. Evertec Inc (NYSE:EVTC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for EVTC is 50.7. 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 December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on EVTC as the stock returned 17.1% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

Follow Evertec Inc. (NYSE:EVTC)

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