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 WideOpenWest, Inc. (NYSE:WOW).
Is WideOpenWest, Inc. (NYSE:WOW) a safe stock to buy now? The best stock pickers are becoming less confident. The number of long hedge fund bets retreated by 1 lately. Our calculations also showed that wow isn’t among the 30 most popular stocks among hedge funds. WOW was in 11 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with WOW positions at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to take a look at the new hedge fund action surrounding WideOpenWest, Inc. (NYSE:WOW).
What have hedge funds been doing with WideOpenWest, Inc. (NYSE:WOW)?
Heading into the fourth quarter of 2018, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the second quarter of 2018. By comparison, 13 hedge funds held shares or bullish call options in WOW heading into this year. With hedgies’ sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Indaba Capital Management held the most valuable stake in WideOpenWest, Inc. (NYSE:WOW), which was worth $12 million at the end of the third quarter. On the second spot was Archer Capital Management which amassed $10.9 million worth of shares. Moreover, GAMCO Investors, Hawk Ridge Management, and Millennium Management were also bullish on WideOpenWest, Inc. (NYSE:WOW), allocating a large percentage of their portfolios to this stock.
Judging by the fact that WideOpenWest, Inc. (NYSE:WOW) has witnessed bearish sentiment from the smart money, we can see that there lies a certain “tier” of hedge funds that elected to cut their full holdings heading into Q3. Interestingly, Mike Vranos’s Ellington dropped the largest investment of the “upper crust” of funds monitored by Insider Monkey, comprising close to $0.3 million in stock. D. E. Shaw’s fund, D E Shaw, also dropped its stock, about $0.1 million worth. These moves are important to note, as total hedge fund interest fell by 1 funds heading into Q3.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as WideOpenWest, Inc. (NYSE:WOW) but similarly valued. We will take a look at Ambac Financial Group, Inc. (NASDAQ:AMBC), Independence Realty Trust Inc (NYSE:IRT), CBTX, Inc. (NASDAQ:CBTX), and Columbus McKinnon Corporation (NASDAQ:CMCO). This group of stocks’ market caps are closest to WOW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMBC | 21 | 180511 | 2 |
| IRT | 11 | 54528 | 6 |
| CBTX | 8 | 26002 | 1 |
| CMCO | 20 | 90248 | 3 |
| Average | 15 | 87822 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $88 million. That figure was $41 million in WOW’s case. Ambac Financial Group, Inc. (NASDAQ:AMBC) is the most popular stock in this table. On the other hand CBTX, Inc. (NASDAQ:CBTX) is the least popular one with only 8 bullish hedge fund positions. WideOpenWest, Inc. (NYSE:WOW) 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 piling on. In this regard AMBC might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
