The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider WestRock Company (NYSE:WRK) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
WestRock Company (NYSE:WRK) shareholders have witnessed an increase in enthusiasm from smart money of late. WRK was in 33 hedge funds’ portfolios at the end of the third quarter of 2018. There were 23 hedge funds in our database with WRK positions at the end of the previous quarter. Our calculations also showed that WRK isn’t among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
We’re going to view the new hedge fund action regarding WestRock Company (NYSE:WRK).
How have hedgies been trading WestRock Company (NYSE:WRK)?
At Q3’s end, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 43% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in WRK heading into this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Lakewood Capital Management held the most valuable stake in WestRock Company (NYSE:WRK), which was worth $213.4 million at the end of the third quarter. On the second spot was Impax Asset Management which amassed $95.6 million worth of shares. Moreover, D E Shaw, Millennium Management, and Renaissance Technologies were also bullish on WestRock Company (NYSE:WRK), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Renaissance Technologies, managed by Jim Simons, created the most valuable position in WestRock Company (NYSE:WRK). Renaissance Technologies had $30.2 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $19.2 million position during the quarter. The following funds were also among the new WRK investors: Dmitry Balyasny’s Balyasny Asset Management, George Baxter’s Sabrepoint Capital, and Israel Englander’s Millennium Management.
Let’s now take a look at hedge fund activity in other stocks similar to WestRock Company (NYSE:WRK). We will take a look at SS&C Technologies Holdings, Inc. (NASDAQ:SSNC), The Cooper Companies, Inc. (NYSE:COO), E*TRADE Financial Corporation (NASDAQ:ETFC), and Arthur J. Gallagher & Co. (NYSE:AJG). This group of stocks’ market values match WRK’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SSNC | 41 | 1698395 | 6 |
| COO | 18 | 1125764 | 0 |
| ETFC | 36 | 1474790 | 4 |
| AJG | 26 | 380676 | 4 |
| Average | 30.25 | 1169906 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.25 hedge funds with bullish positions and the average amount invested in these stocks was $1169.91 billion. That figure was $619 million in WRK’s case. SS&C Technologies Holdings, Inc. (NASDAQ:SSNC) is the most popular stock in this table. On the other hand The Cooper Companies, Inc. (NYSE:COO) is the least popular one with only 18 bullish hedge fund positions. WestRock Company (NYSE:WRK) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard SSNC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
