Hedge Funds Are Betting On W.W. Grainger, Inc. (GWW)

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish thesis and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about W.W. Grainger, Inc. (NYSE:GWW) in this article.

Is W.W. Grainger, Inc. (NYSE:GWW) a first-rate investment now? Prominent investors are taking a bullish view. The number of bullish hedge fund positions advanced by 2 lately. GWW was in 18 hedge funds’ portfolios at the end of the third quarter of 2015. There were 16 hedge funds in our database with GWW positions 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 Motorola Solutions Inc (NYSE:MSI), CenturyLink, Inc. (NYSE:CTL), and Tyco International Ltd. (NYSE:TYC) to gather more data points.

To most market participants, hedge funds are viewed as worthless, old investment vehicles of the past. While there are more than 8000 funds trading today, Our researchers look at the moguls of this group, around 700 funds. It is estimated that this group of investors command the majority of the smart money’s total asset base, and by shadowing their first-class stock picks, Insider Monkey has unearthed numerous investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy beat the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, let’s check out the fresh action surrounding W.W. Grainger, Inc. (NYSE:GWW).

How are hedge funds trading W.W. Grainger, Inc. (NYSE:GWW)?

Heading into Q4, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from the previous quarter. With the smart money’s sentiment swirling, there exist a few key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, David Blood and Al Gore’s Generation Investment Management has the most valuable position in W.W. Grainger, Inc. (NYSE:GWW), worth close to $290.4 million, corresponding to 4.2% of its total 13F portfolio. On Generation Investment Management’s heels is William von Mueffling of Cantillon Capital Management, with an $177.2 million position; 3.8% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors that are bullish contain Ken Griffin’s Citadel Investment Group, Nigel Greig and Kenneth Cowin’s Pittencrieff Partners – Gabalex Capital and Cliff Asness’s AQR Capital Management.

Consequently, key money managers were leading the bulls’ herd. Pine River Capital Management, managed by Brian Taylor, initiated the most outsized position in W.W. Grainger, Inc. (NYSE:GWW). Pine River Capital Management had $1.8 million invested in the company at the end of the quarter. Matthew Hulsizer’s PEAK6 Capital Management also made an $0.5 million investment in the stock during the quarter. The following funds were also among the new GWW investors: Paul Tudor Jones’s Tudor Investment Corp and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners.

Let’s also examine hedge fund activity in other stocks similar to W.W. Grainger, Inc. (NYSE:GWW). We will take a look at Motorola Solutions Inc (NYSE:MSI), CenturyLink, Inc. (NYSE:CTL), Tyco International Ltd. (NYSE:TYC), and Pearson PLC (ADR) (NYSE:PSO). This group of stocks’ market caps resemble GWW’s market cap.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $1083 million. That figure was $855 million in GWW’s case. Tyco International Ltd. (NYSE:TYC) is the most popular stock in this table, while the least popular one is Pearson PLC (ADR) (NYSE:PSO). W.W. Grainger, Inc. (NYSE:GWW), with 18 bullish hedge fund positions is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal, and we’d rather spend our time researching stocks that hedge funds are collectively most fond of, such as, in this case, TYC..