Do Hedge Funds Love Winnebago Industries, Inc. (WGO)?

The elite funds run by legendary investors such as Dan Loeb and David Tepper make hundreds of millions of dollars for themselves and their investors by spending enormous resources doing research on small cap stocks that big investment banks don’t follow. Because of their pay structures, they have strong incentive to do the research necessary to beat the market. That’s why we pay close attention to what they think in small cap stocks. In this article, we take a closer look at Winnebago Industries, Inc. (NYSE:WGO) from the perspective of those elite funds.

Winnebago Industries, Inc. (NYSE:WGO) has seen a decrease in activity from the world’s largest hedge funds of late. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Unitil Corporation (NYSE:UTL), Cardiovascular Systems Inc (NASDAQ:CSII), and SP Plus Corp (NASDAQ:SP) to gather more data points.

According to most stock holders, hedge funds are perceived as unimportant, outdated investment tools of the past. While there are more than 8000 funds in operation at the moment, Our researchers look at the elite of this club, about 700 funds. Most estimates calculate that this group of people manage most of the hedge fund industry’s total asset base, and by keeping an eye on their matchless picks, Insider Monkey has spotted various investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per year for a decade in their back tests.

Keeping this in mind, we’re going to take a glance at the key action surrounding Winnebago Industries, Inc. (NYSE:WGO).

Hedge fund activity in Winnebago Industries, Inc. (NYSE:WGO)

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a decline of 27% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the most valuable position in Winnebago Industries, Inc. (NYSE:WGO). The fund has a $55.7 million stake in the company, comprising 0.3% of its 13F portfolio. The second largest stake is held by Jeffrey Gendell of Tontine Asset Management, with a $10.6 million position; 2.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that hold long positions contain Israel Englander’s Millennium Management, Mario Gabelli’s GAMCO Investors and Joel Greenblatt’s Gotham Asset Management.

Since Winnebago Industries, Inc. (NYSE:WGO) has faced bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there was a specific group of fund managers that decided to sell off their entire stakes by the end of the third quarter. It’s worth mentioning that Peter Muller’s PDT Partners said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $5.1 million in stock, and Steve Pei’s Gratia Capital was right behind this move, as the fund dropped about $2.6 million worth of shares. These transactions are intriguing to say the least, as total hedge fund interest fell by 4 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Winnebago Industries, Inc. (NYSE:WGO). These stocks are Unitil Corporation (NYSE:UTL), Cardiovascular Systems Inc (NASDAQ:CSII), SP Plus Corp (NASDAQ:SP), and Republic Bancorp, Inc. KY (NASDAQ:RBCAA). This group of stocks’ market values are similar to WGO’s market value.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was a whooping $78 million in WGO’s case. Cardiovascular Systems Inc (NASDAQ:CSII) is the most popular stock in this table. On the other hand Republic Bancorp, Inc. KY (NASDAQ:RBCAA) is the least popular one with only 4 bullish hedge fund positions. Winnebago Industries, Inc. (NYSE:WGO) is not the most popular stock in this group, but hedge fund interest is still above average. While this is a slightly positive signal, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CSII might be a better candidate to consider a long position.