Out of thousands of stocks that are currently traded on the market, it is difficult to determine those that can really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of over 700 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX).
WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX) was in 22 hedge funds’ portfolios at the end of the third quarter of 2015. WX has experienced an increase in hedge fund interest in recent months. There were 21 hedge funds in our database with WX holdings at the end of the previous quarter. 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 MPLX LP (NYSE:MPLX), American Eagle Outfitters (NYSE:AEO), and Industrias Bachoco, S.A.B. de C.V. (ADR) (NYSE:IBA) to gather more data points.
Follow Wuxi Pharmatech Cayman Inc (NYSE:WX)
Follow Wuxi Pharmatech Cayman Inc (NYSE:WX)
Keeping this in mind, let’s take a peek at the fresh action encompassing WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX).
What have hedge funds been doing with WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Frank Brosens’s Taconic Capital has the biggest position in WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX), worth close to $92.9 million, comprising 3.4% of its total 13F portfolio. Coming in second is OZ Management, led by Daniel S. Och, holding a $74 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism contain Robert Emil Zoellner’s Alpine Associates, Thomas Steyer’s Farallon Capital and Lei Zhang’s Hillhouse Capital Management.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Alpine Associates, managed by Robert Emil Zoellner, initiated the most valuable position in WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX). Alpine Associates had $56.6 million invested in the company at the end of the quarter. Thomas Steyer’s Farallon Capital also initiated a $55.9 million position during the quarter. The following funds were also among the new WX investors: Noam Gottesman’s GLG Partners, Michael Novogratz’s Fortress Investment Group, and Millennium Management Subsidiary’s Green Arrow Capital Management.
Let’s check out hedge fund activity in other stocks similar to WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX). These stocks are MPLX LP (NYSE:MPLX), American Eagle Outfitters (NYSE:AEO), Industrias Bachoco, S.A.B. de C.V. (ADR) (NYSE:IBA), and TC Pipelines, LP (NYSE:TCP). This group of stocks’ market caps are similar to WX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MPLX | 13 | 49708 | 4 |
| AEO | 40 | 494214 | 4 |
| IBA | 5 | 50018 | -1 |
| TCP | 4 | 5675 | 1 |
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $150 million. That figure was $441 million in WX’s case. American Eagle Outfitters (NYSE:AEO) is the most popular stock in this table. On the other hand TC Pipelines, LP (NYSE:TCP) is the least popular one with only 4 bullish hedge fund positions. WuXi PharmaTech (Cayman) Inc. (ADR) (NYSE:WX) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal, which when taken in combination with the number of funds long the stock increasing by 1, makes WX worthy of a closer look.
