The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 867 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 September 30th. Hedge funds’ consensus stock picks performed spectacularly over the last 3 years, but 2022 hasn’t been kind to hedge funds. In this article we look at how hedge funds traded Waters Corporation (NYSE:WAT) and determine whether the smart money was really smart about this stock.
Waters Corporation (NYSE:WAT) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 40 hedge funds’ portfolios at the end of September. Our calculations also showed that WAT 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 WAT to other stocks including PerkinElmer, Inc. (NYSE:PKI), International Paper Company (NYSE:IP), and Kellogg Company (NYSE:K) 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 let’s take a glance at the key hedge fund action encompassing Waters Corporation (NYSE:WAT).
David E. Shaw of D.E. Shaw
Do Hedge Funds Think WAT Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2021, a total of 40 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in WAT a year ago. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Fundsmith LLP was the largest shareholder of Waters Corporation (NYSE:WAT), with a stake worth $1611.9 million reported as of the end of September. Trailing Fundsmith LLP was Arrowstreet Capital, which amassed a stake valued at $331.9 million. Impax Asset Management, AQR Capital Management, and D E Shaw 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 Fundsmith LLP allocated the biggest weight to Waters Corporation (NYSE:WAT), around 4.46% of its 13F portfolio. Partner Fund Management is also relatively very bullish on the stock, earmarking 1.24 percent of its 13F equity portfolio to WAT.
Seeing as Waters Corporation (NYSE:WAT) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there were a few hedge funds that decided to sell off their full holdings last quarter. Interestingly, Kevin Molloy’s Iron Triangle Partners dumped the largest stake of the “upper crust” of funds monitored by Insider Monkey, comprising about $58.8 million in stock. Michael Rockefeller and KarláKroeker’s fund, Woodline Partners, also sold off its stock, about $16.1 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s check out hedge fund activity in other stocks similar to Waters Corporation (NYSE:WAT). These stocks are PerkinElmer, Inc. (NYSE:PKI), International Paper Company (NYSE:IP), Kellogg Company (NYSE:K), KE Holdings Inc (NYSE:BEKE), Ventas, Inc. (NYSE:VTR), McCormick & Company, Incorporated (NYSE:MKC), and DTE Energy Company (NYSE:DTE). This group of stocks’ market valuations are closest to WAT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PKI | 31 | 1920736 | -1 |
| IP | 30 | 263108 | -1 |
| K | 22 | 290019 | -10 |
| BEKE | 26 | 1740683 | -5 |
| VTR | 23 | 464641 | -2 |
| MKC | 35 | 1782097 | 1 |
| DTE | 22 | 426119 | -10 |
| Average | 27 | 983915 | -4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $984 million. That figure was $2673 million in WAT’s case. McCormick & Company, Incorporated (NYSE:MKC) is the most popular stock in this table. On the other hand Kellogg Company (NYSE:K) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Waters Corporation (NYSE:WAT) is more popular among hedge funds. Our overall hedge fund sentiment score for WAT is 85. 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 beat the market by 3.6 percentage points. Unfortunately, WAT wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WAT were disappointed as the stock returned -10.4% since the end of the third quarter (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
Follow Waters Corp (NYSE:WAT)
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Disclosure: None. This article was originally published at Insider Monkey.
