In this article we will check out the progression of hedge fund sentiment towards Evergy, Inc. (NYSE:EVRG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Is Evergy, Inc. (NYSE:EVRG) a healthy stock for your portfolio? Hedge funds were taking a bullish view. The number of bullish hedge fund bets went up by 10 recently. Evergy, Inc. (NYSE:EVRG) was in 40 hedge funds’ portfolios at the end of June. The all time high for this statistics is 30. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that EVRG isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 30 hedge funds in our database with EVRG holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now let’s review the key hedge fund action surrounding Evergy, Inc. (NYSE:EVRG).
What does smart money think about Evergy, Inc. (NYSE:EVRG)?
At the end of June, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EVRG over the last 20 quarters. With the smart money’s sentiment swirling, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the most valuable position in Evergy, Inc. (NYSE:EVRG), worth close to $243.2 million, comprising 0.2% of its total 13F portfolio. The second largest stake is held by D. E. Shaw of D E Shaw, with a $146.9 million position; 0.2% of its 13F portfolio is allocated to the company. Other members of the smart money that hold long positions consist of Israel Englander’s Millennium Management, Benjamin Pass’s TOMS Capital and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position TOMS Capital allocated the biggest weight to Evergy, Inc. (NYSE:EVRG), around 37.67% of its 13F portfolio. Covalis Capital is also relatively very bullish on the stock, designating 20.29 percent of its 13F equity portfolio to EVRG.
With a general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. TOMS Capital, managed by Benjamin Pass, created the most outsized position in Evergy, Inc. (NYSE:EVRG). TOMS Capital had $94.9 million invested in the company at the end of the quarter. Dan Loeb’s Third Point also initiated a $88.9 million position during the quarter. The other funds with brand new EVRG positions are Zilvinas Mecelis’s Covalis Capital, Keith Meister’s Corvex Capital, and Joseph Samuels’s Islet Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Evergy, Inc. (NYSE:EVRG) but similarly valued. We will take a look at Bio-Rad Laboratories, Inc. (NYSE:BIO), Vipshop Holdings Limited (NYSE:VIPS), Altice USA, Inc. (NYSE:ATUS), M&T Bank Corporation (NYSE:MTB), Sun Communities Inc (NYSE:SUI), Magna International Inc. (NYSE:MGA), and Leidos Holdings Inc (NYSE:LDOS). This group of stocks’ market valuations match EVRG’s market valuation.
|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 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $904 million. That figure was $1158 million in EVRG’s case. Altice USA, Inc. (NYSE:ATUS) is the most popular stock in this table. On the other hand Magna International Inc. (NYSE:MGA) is the least popular one with only 19 bullish hedge fund positions. Evergy, Inc. (NYSE:EVRG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for EVRG is 67.6. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 23% in 2020 through October 30th and beat the market again by 20.1 percentage points. Unfortunately EVRG wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on EVRG were disappointed as the stock returned -6% since the end of June (through 10/30) 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 many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.