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 third 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 6 years and analyze what the smart money thinks of Walmart Inc. (NYSE:WMT) based on that data and determine whether they were really smart about the stock.
Walmart Inc. (NYSE:WMT) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 71 hedge funds’ portfolios at the end of the third quarter of 2021. Our calculations also showed that WMT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). At the end of this article we will also compare WMT to other stocks including UnitedHealth Group Inc. (NYSE:UNH), Bank of America Corporation (NYSE:BAC), and The Home Depot, Inc. (NYSE:HD) to get a better sense of its popularity.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 we’re going to analyze the fresh hedge fund action encompassing Walmart Inc. (NYSE:WMT).
Do Hedge Funds Think WMT Is A Good Stock To Buy Now?
At third quarter’s end, a total of 71 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WMT over the last 25 quarters. With hedge funds’ sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of Walmart Inc. (NYSE:WMT), with a stake worth $1815.3 million reported as of the end of September. Trailing Fisher Asset Management was Bill & Melinda Gates Foundation Trust, which amassed a stake valued at $964.8 million. Bridgewater Associates, D E Shaw, and Arrowstreet Capital 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 Empirical Capital Partners allocated the biggest weight to Walmart Inc. (NYSE:WMT), around 15.38% of its 13F portfolio. Pittencrieff Partners – Gabalex Capital is also relatively very bullish on the stock, dishing out 7.41 percent of its 13F equity portfolio to WMT.
Due to the fact that Walmart Inc. (NYSE:WMT) has experienced bearish sentiment from the entirety of the hedge funds we track, we can see that there is a sect of funds who were dropping their entire stakes heading into Q4. Intriguingly, Joseph Samuels’s Islet Management dropped the biggest investment of the 750 funds monitored by Insider Monkey, worth close to $70.5 million in call options. Michael Burry’s fund, Scion Asset Management, also dumped its call options, about $53.4 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Walmart Inc. (NYSE:WMT) but similarly valued. We will take a look at UnitedHealth Group Inc. (NYSE:UNH), Bank of America Corporation (NYSE:BAC), The Home Depot, Inc. (NYSE:HD), Mastercard Incorporated (NYSE:MA), The Procter & Gamble Company (NYSE:PG), ASML Holding N.V. (NASDAQ:ASML), and The Walt Disney Company (NYSE:DIS). This group of stocks’ market valuations are closest to WMT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UNH | 95 | 11705313 | -10 |
| BAC | 72 | 46487618 | -15 |
| HD | 58 | 4380170 | -6 |
| MA | 146 | 17659997 | -10 |
| PG | 69 | 6414152 | 1 |
| ASML | 41 | 4858031 | -3 |
| DIS | 101 | 9416047 | -11 |
| Average | 83.1 | 14417333 | -7.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 83.1 hedge funds with bullish positions and the average amount invested in these stocks was $14417 million. That figure was $7933 million in WMT’s case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand ASML Holding N.V. (NASDAQ:ASML) is the least popular one with only 41 bullish hedge fund positions. Walmart Inc. (NYSE:WMT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WMT is 49.3. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on WMT as the stock returned 0.7% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
