Is Entravision Communications Corporation (EVC) A Good Stock To Buy?
The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtEntravision Communications Corporation (NYSE:EVC) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is Entravision Communications Corporation (NYSE:EVC) ready to rally soon? The smart money was getting less optimistic. The number of long hedge fund bets fell by 3 recently. Our calculations also showed that EVC 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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John Overdeck of Two Sigma Advisors[/caption]
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. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's view the new hedge fund action surrounding Entravision Communications Corporation (NYSE:EVC).
What does smart money think about Entravision Communications Corporation (NYSE:EVC)?
Heading into the second quarter of 2020, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -23% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in EVC a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Angelo Gordon & Co was the largest shareholder of Entravision Communications Corporation (NYSE:EVC), with a stake worth $9.6 million reported as of the end of September. Trailing Angelo Gordon & Co was Renaissance Technologies, which amassed a stake valued at $4.5 million. D E Shaw, Arrowstreet Capital, and Two Sigma Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Angelo Gordon & Co allocated the biggest weight to Entravision Communications Corporation (NYSE:EVC), around 0.72% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, designating 0.03 percent of its 13F equity portfolio to EVC.
Seeing as Entravision Communications Corporation (NYSE:EVC) has experienced falling interest from the smart money, logic holds that there exists a select few hedge funds who were dropping their full holdings by the end of the first quarter. At the top of the heap, Israel Englander's Millennium Management dropped the biggest investment of all the hedgies tracked by Insider Monkey, worth an estimated $0.7 million in stock. Cliff Asness's fund, AQR Capital Management, also said goodbye to its stock, about $0.6 million worth. These transactions are important to note, as total hedge fund interest was cut by 3 funds by the end of the first quarter.
Let's check out hedge fund activity in other stocks similar to Entravision Communications Corporation (NYSE:EVC). We will take a look at Aspen Group Inc. (NASDAQ:ASPU), Itamar Medical Ltd. (NASDAQ:ITMR), Casper Sleep Inc. (NYSE:CSPR), and MEI Pharma Inc (NASDAQ:MEIP). All of these stocks' market caps resemble EVC's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ASPU,6,13915,-4 ITMR,8,22287,5 CSPR,4,4295,4 MEIP,14,45986,-1 Average,8,21621,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $18 million in EVC's case. MEI Pharma Inc (NASDAQ:MEIP) is the most popular stock in this table. On the other hand Casper Sleep Inc. (NYSE:CSPR) is the least popular one with only 4 bullish hedge fund positions. Entravision Communications Corporation (NYSE:EVC) is not the most popular stock in this group but hedge fund interest is still above average. 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 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. Unfortunately EVC wasn't nearly as popular as these 10 stocks and hedge funds that were betting on EVC were disappointed as the stock returned -28.5% during the same time period 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.
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