Were Hedge Funds Right About Everi Holdings Inc (EVRI)?

Hedge funds don’t get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don’t realize is that 100% of the passive funds didn’t see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March.

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of December. At Insider Monkey, we follow nearly 835 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Everi Holdings Inc (NYSE:EVRI), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Everi Holdings Inc (NYSE:EVRI) was in 30 hedge funds’ portfolios at the end of the fourth quarter of 2019. EVRI investors should be aware of an increase in hedge fund interest in recent months. There were 23 hedge funds in our database with EVRI positions at the end of the previous quarter. Our calculations also showed that EVRI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with 77% accuracy, so we check out his stock picks. A former hedge fund manager is pitching the “next Amazon” in this video; again we are listening. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a look at the new hedge fund action surrounding Everi Holdings Inc (NYSE:EVRI).

What have hedge funds been doing with Everi Holdings Inc (NYSE:EVRI)?

At Q4’s end, a total of 30 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 30% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards EVRI over the last 18 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

The largest stake in Everi Holdings Inc (NYSE:EVRI) was held by Indaba Capital Management, which reported holding $56.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $46.2 million position. Other investors bullish on the company included Private Capital Management, Millennium Management, and Marshall Wace LLP. In terms of the portfolio weights assigned to each position Indaba Capital Management allocated the biggest weight to Everi Holdings Inc (NYSE:EVRI), around 22.88% of its 13F portfolio. Becker Drapkin Management is also relatively very bullish on the stock, setting aside 11.18 percent of its 13F equity portfolio to EVRI.

Consequently, key money managers were leading the bulls’ herd. Balyasny Asset Management, managed by Dmitry Balyasny, created the most valuable position in Everi Holdings Inc (NYSE:EVRI). Balyasny Asset Management had $8.4 million invested in the company at the end of the quarter. Michael O’Keefe’s 12th Street Asset Management also initiated a $4.9 million position during the quarter. The following funds were also among the new EVRI investors: Matthew L Pinz’s Pinz Capital, Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, and Ryan Caldwell’s Chiron Investment Management.

Let’s go over hedge fund activity in other stocks similar to Everi Holdings Inc (NYSE:EVRI). These stocks are Kenon Holdings Ltd. (NYSE:KEN), ProPetro Holding Corp. (NYSE:PUMP), Star Bulk Carriers Corp. (NASDAQ:SBLK), and Designer Brands Inc. (NYSE:DBI). This group of stocks’ market caps are closest to EVRI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KEN 2 412 1
PUMP 23 222838 1
SBLK 16 559337 4
DBI 22 104453 0
Average 15.75 221760 1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $299 million in EVRI’s case. ProPetro Holding Corp. (NYSE:PUMP) is the most popular stock in this table. On the other hand Kenon Holdings Ltd. (NYSE:KEN) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Everi Holdings Inc (NYSE:EVRI) 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 gained 1.0% in 2020 through May 1st and still beat the market by 12.9 percentage points. Unfortunately EVRI wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on EVRI were disappointed as the stock returned -66% during the four months of 2020 (through May 1st) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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