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Were Hedge Funds Right About Evercore Inc. (EVR)?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Evercore Inc. (NYSE:EVR) based on that data and determine whether they were really smart about the stock.

Evercore Inc. (NYSE:EVR) shareholders have witnessed a decrease in support from the world’s most elite money managers of late. Our calculations also showed that EVR isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Today there are a multitude of methods stock traders have at their disposal to assess publicly traded companies. A couple of the best methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the top fund managers can outperform the market by a healthy amount (see the details here).

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Now let’s go over the new hedge fund action regarding Evercore Inc. (NYSE:EVR).

What have hedge funds been doing with Evercore Inc. (NYSE:EVR)?

At the end of the first quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in EVR over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Cliff Asness’s AQR Capital Management has the biggest position in Evercore Inc. (NYSE:EVR), worth close to $34.7 million, corresponding to 0.1% of its total 13F portfolio. On AQR Capital Management’s heels is GLG Partners, led by Noam Gottesman, holding a $25.3 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish include Chuck Royce’s Royce & Associates, Ken Griffin’s Citadel Investment Group and Renaissance Technologies. In terms of the portfolio weights assigned to each position Kettle Hill Capital Management allocated the biggest weight to Evercore Inc. (NYSE:EVR), around 2.17% of its 13F portfolio. BlueMar Capital Management is also relatively very bullish on the stock, earmarking 1.41 percent of its 13F equity portfolio to EVR.

Due to the fact that Evercore Inc. (NYSE:EVR) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of funds who sold off their full holdings heading into Q4. Interestingly, Donald Sussman’s Paloma Partners dropped the biggest stake of all the hedgies followed by Insider Monkey, totaling close to $1.6 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also cut its stock, about $0.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 3 funds heading into Q4.

Let’s check out hedge fund activity in other stocks similar to Evercore Inc. (NYSE:EVR). We will take a look at Triton International Limited (NYSE:TRTN), Karuna Therapeutics, Inc. (NASDAQ:KRTX), Weingarten Realty Investors (NYSE:WRI), and Liberty Latin America Ltd. (NASDAQ:LILAK). This group of stocks’ market caps resemble EVR’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TRTN 12 26482 -4
KRTX 16 148161 1
WRI 20 72034 0
LILAK 25 257107 4
Average 18.25 125946 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.25 hedge funds with bullish positions and the average amount invested in these stocks was $126 million. That figure was $198 million in EVR’s case. Liberty Latin America Ltd. (NASDAQ:LILAK) is the most popular stock in this table. On the other hand Triton International Limited (NYSE:TRTN) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Evercore Inc. (NYSE:EVR) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on EVR as the stock returned 29.2% in Q2 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.