Do Hedge Funds Love WESCO International, Inc. (WCC)?

With the second-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the third quarter of 2021. One of these stocks was WESCO International, Inc. (NYSE:WCC).

WESCO International, Inc. (NYSE:WCC) shareholders have witnessed a decrease in hedge fund sentiment recently. WESCO International, Inc. (NYSE:WCC) was in 23 hedge funds’ portfolios at the end of June. The all time high for this statistic is 34. Our calculations also showed that WCC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

William Harnisch of Peconic Partners LLC

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 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. 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 homepage. Keeping this in mind let’s take a look at the key hedge fund action surrounding WESCO International, Inc. (NYSE:WCC).

Do Hedge Funds Think WCC Is A Good Stock To Buy Now?

At the end of June, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WCC over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Leonard Green & Partners held the most valuable stake in WESCO International, Inc. (NYSE:WCC), which was worth $586.1 million at the end of the second quarter. On the second spot was Diamond Hill Capital which amassed $215.5 million worth of shares. Peconic Partners LLC, Adage Capital Management, 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 Peconic Partners LLC allocated the biggest weight to WESCO International, Inc. (NYSE:WCC), around 19.24% of its 13F portfolio. Leonard Green & Partners is also relatively very bullish on the stock, designating 4.67 percent of its 13F equity portfolio to WCC.

Since WESCO International, Inc. (NYSE:WCC) has experienced declining sentiment from hedge fund managers, we can see that there exists a select few money managers that elected to cut their full holdings in the second quarter. Intriguingly, Asad Rahman and Aman Kapadia’s Akaris Global Partners cut the largest position of the “upper crust” of funds tracked by Insider Monkey, comprising an estimated $6.3 million in stock, and Jay Genzer’s Thames Capital Management was right behind this move, as the fund cut about $6.2 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 5 funds in the second quarter.

Let’s go over hedge fund activity in other stocks similar to WESCO International, Inc. (NYSE:WCC). We will take a look at ASGN Incorporated (NYSE:ASGN), Armstrong World Industries, Inc. (NYSE:AWI), Reata Pharmaceuticals, Inc. (NASDAQ:RETA), Blueprint Medicines Corporation (NASDAQ:BPMC), New York Community Bancorp, Inc. (NYSE:NYCB), Travel + Leisure Co. (NYSE:TNL), and Flowers Foods, Inc. (NYSE:FLO). All of these stocks’ market caps match WCC’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.9 hedge funds with bullish positions and the average amount invested in these stocks was $451 million. That figure was $1197 million in WCC’s case. Blueprint Medicines Corporation (NASDAQ:BPMC) is the most popular stock in this table. On the other hand ASGN Incorporated (NYSE:ASGN) is the least popular one with only 15 bullish hedge fund positions. WESCO International, Inc. (NYSE:WCC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WCC is 39.3. 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 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on WCC as the stock returned 22% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.