Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Equus Total Return, Inc. (NYSE:EQS) to find out whether there were any major changes in hedge funds’ views.
Hedge fund interest in Equus Total Return, Inc. (NYSE:EQS) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that EQS 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). At the end of this article we will also compare EQS to other stocks including Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF), RCM Technologies, Inc. (NASDAQ:RCMT), and JAKKS Pacific, Inc. (NASDAQ:JAKK) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are many methods stock traders put to use to value stocks. A couple of the most under-the-radar methods are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the top picks of the elite investment managers can outperform their index-focused peers by a significant amount (see the details here).
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 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. Keeping this in mind let’s take a peek at the recent hedge fund action encompassing Equus Total Return, Inc. (NYSE:EQS).
How have hedgies been trading Equus Total Return, Inc. (NYSE:EQS)?
At third quarter’s end, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in EQS over the last 21 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Bulldog Investors, managed by Phillip Goldstein, Andrew Dakos and Steven Samuels, holds the most valuable position in Equus Total Return, Inc. (NYSE:EQS). Bulldog Investors has a $0.1 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Bulldog Investors’s heels is Nelson Obus of Wynnefield Capital, with a $0.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other peers with similar optimism include Ron Mass’s Almitas Capital, Frederick DiSanto’s Ancora Advisors and . In terms of the portfolio weights assigned to each position Almitas Capital allocated the biggest weight to Equus Total Return, Inc. (NYSE:EQS), around 0.09% of its 13F portfolio. Wynnefield Capital is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to EQS.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Equus Total Return, Inc. (NYSE:EQS) but similarly valued. These stocks are Rocky Mountain Chocolate Factory, Inc. (NASDAQ:RMCF), RCM Technologies, Inc. (NASDAQ:RCMT), JAKKS Pacific, Inc. (NASDAQ:JAKK), Sundance Energy Inc. (NASDAQ:SNDE), China Green Agriculture, Inc (NYSE:CGA), China Pharma Holdings, Inc. (NYSE:CPHI), and Koss Corporation (NASDAQ:KOSS). This group of stocks’ market values resemble EQS’s market value.
|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 1.9 hedge funds with bullish positions and the average amount invested in these stocks was $1 million. That figure was $0 million in EQS’s case. JAKKS Pacific, Inc. (NASDAQ:JAKK) is the most popular stock in this table. On the other hand Sundance Energy Inc. (NASDAQ:SNDE) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Equus Total Return, Inc. (NYSE:EQS) is more popular among hedge funds. Our overall hedge fund sentiment score for EQS is 75. 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 November 27th and still beat the market by 16.1 percentage points. Unfortunately EQS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on EQS were disappointed as the stock returned -4.1% since the end of the third quarter (through 11/27) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Equus Total Return Inc. (NYSE:EQS)
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Disclosure: None. This article was originally published at Insider Monkey.