“Market conditions are changing. The continued rise in interest rates suggests we are in the early stages of a bond bear market, which could intensify as central banks withdraw liquidity. The receding tide of liquidity will start to reveal more rocks beyond what has been exposed in emerging markets so far, and the value of a value discipline will be in avoiding the biggest capital-destroying rocks. If a rock emerges on the crowded shore of U.S. momentum, it could result in a major liquidity challenge, as momentum is often most intense on the downside as a crowded trade reverses. So investors are facing a large potential trade-off right now: continue to bet on the current dominance of momentum and the S&P 500, or bet on change and take an active value bet in names with attractive value and optionality, but with negative momentum,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Wintrust Financial Corporation (NASDAQ:WTFC).
Is Wintrust Financial Corporation (NASDAQ:WTFC) a buy, sell, or hold? The smart money is in a bullish mood. The number of long hedge fund bets rose by 7 lately. Our calculations also showed that WTFC 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.
Hedge fund activity in Wintrust Financial Corporation (NASDAQ:WTFC) Let’s review the fresh hedge fund action regarding Wintrust Financial Corporation (NASDAQ:WTFC).
At the end of the third quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 41% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in WTFC at the beginning of this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Israel Englander’s Millennium Management has the number one position in Wintrust Financial Corporation (NASDAQ:WTFC), worth close to $119.6 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is Ken Griffin of Citadel Investment Group, with a $97.1 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that hold long positions include Ravi Chopra’s Azora Capital, Ken Fisher’s Fisher Asset Management and Clint Carlson’s Carlson Capital.
Now, key hedge funds have been driving this bullishness. Carlson Capital, managed by Clint Carlson, created the largest position in Wintrust Financial Corporation (NASDAQ:WTFC). Carlson Capital had $35.6 million invested in the company at the end of the quarter. Jim Simons’s Renaissance Technologies also initiated a $4.8 million position during the quarter. The other funds with new positions in the stock are George Soros’s Soros Fund Management, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors.
Let’s now take a look at hedge fund activity in other stocks similar to Wintrust Financial Corporation (NASDAQ:WTFC). We will take a look at Air Lease Corp (NYSE:AL), Conduent Incorporated (NYSE:CNDT), 51job, Inc. (NASDAQ:JOBS), and Hospitality Properties Trust (NASDAQ:HPT). This group of stocks’ market values are closest to WTFC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AL | 27 | 427583 | 3 |
| CNDT | 34 | 1156262 | 2 |
| JOBS | 14 | 45623 | 2 |
| HPT | 16 | 86991 | 0 |
| Average | 22.75 | 429115 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $429 million. That figure was $509 million in WTFC’s case. Conduent Incorporated (NYSE:CNDT) is the most popular stock in this table. On the other hand 51job, Inc. (NASDAQ:JOBS) is the least popular one with only 14 bullish hedge fund positions. Wintrust Financial Corporation (NASDAQ:WTFC) 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 CNDT might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
