Hedge Funds Are Betting On Western Digital Corp (WDC)

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Western Digital Corp (NASDAQ:WDC) .

Is Western Digital Corp (NASDAQ:WDC) the right investment to pursue these days? The best stock pickers are altogether getting more optimistic. The number of bullish hedge fund bets advanced by 3 lately. WDCwas in 51 hedge funds’ portfolios at the end of September. There were 48 hedge funds in our database with WDC 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 T. Rowe Price Group, Inc. (NASDAQ:TROW), Hartford Financial Services Group Inc (NYSE:HIG), and C.R. Bard, Inc. (NYSE:BCR) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

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Keeping this in mind, we’re going to review the fresh action encompassing Western Digital Corp (NASDAQ:WDC).

How have hedgies been trading Western Digital Corp (NASDAQ:WDC)?

At the end of the third quarter, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, up 6% from the previous quarter. On the other hand, there were a total of 37 hedge funds with a bullish position in WDC at the beginning of this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Two Sigma Advisors, led by John Overdeck and David Siegel, holds the largest position in Western Digital Corp (NASDAQ:WDC). According to its latest 13F filing, the fund has a $114.5 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Robert Rodriguez and Steven Romick of First Pacific Advisors LLC, with a $110.2 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions contain Curtis Macnguyen’s Ivory Capital (Investment Mgmt), John Brennan’s Sirios Capital Management and John Burbank’s Passport Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industrywide interest jumped, key money managers have been driving this bullishness. Passport Capital, led by John Burbank, established the most valuable position in Western Digital Corp (NASDAQ:WDC). According to its latest 13F filing, the fund had $70.1 million invested in the company at the end of the quarter. Ken Heebner’s Capital Growth Management also initiated a $58.9 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Joe DiMenna’s ZWEIG DIMENNA PARTNERS, and John Hurley’s Cavalry Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Western Digital Corp (NASDAQ:WDC) but similarly valued. We will take a look at T. Rowe Price Group, Inc. (NASDAQ:TROW), Hartford Financial Services Group Inc (NYSE:HIG), C.R. Bard, Inc. (NYSE:BCR), and Twitter Inc (NYSE:TWTR). This group of stocks’ market values resemble WDC’s market value.

As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $950 million. That figure was $1.1 billion in WDC’s case. Twitter Inc (NYSE:TWTR) is the most popular stock in this table. On the other hand T. Rowe Price Group, Inc. (NASDAQ:TROW) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks Western Digital Corp (NASDAQ:WDC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

Disclosure: none.