Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards WestRock Company (NYSE:WRK) changed recently.
WestRock Company (NYSE:WRK) was in 27 hedge funds’ portfolios at the end of March. The all time high for this statistic is 43. WRK investors should be aware of a decrease in hedge fund interest lately. There were 43 hedge funds in our database with WRK holdings at the end of December. Our calculations also showed that WRK isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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Joel Greenblatt of Gotham Asset Management
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Do Hedge Funds Think WRK Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -37% from the fourth quarter of 2020. By comparison, 26 hedge funds held shares or bullish call options in WRK a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in WestRock Company (NYSE:WRK) was held by Impax Asset Management, which reported holding $190.7 million worth of stock at the end of December. It was followed by AQR Capital Management with a $70.3 million position. Other investors bullish on the company included Atlantic Investment Management, Lakewood Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to WestRock Company (NYSE:WRK), around 19.5% of its 13F portfolio. 0 is also relatively very bullish on the stock, earmarking 5.42 percent of its 13F equity portfolio to WRK.
Judging by the fact that WestRock Company (NYSE:WRK) has faced declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of money managers that decided to sell off their full holdings in the first quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dumped the biggest investment of the 750 funds monitored by Insider Monkey, valued at close to $81.5 million in stock, and Alexander Mitchell’s Scopus Asset Management was right behind this move, as the fund said goodbye to about $21.8 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 16 funds in the first quarter.
Let’s also examine hedge fund activity in other stocks similar to WestRock Company (NYSE:WRK). We will take a look at Loews Corporation (NYSE:L), NICE Ltd (NASDAQ:NICE), Molina Healthcare, Inc. (NYSE:MOH), The Scotts Miracle-Gro Company (NYSE:SMG), Dynatrace, Inc. (NYSE:DT), Leidos Holdings Inc (NYSE:LDOS), and James Hardie Industries plc (NYSE:JHX). This group of stocks’ market caps are closest to WRK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| L | 21 | 200364 | 2 |
| NICE | 33 | 868132 | 7 |
| MOH | 31 | 1561071 | 4 |
| SMG | 34 | 445170 | 5 |
| DT | 52 | 1638106 | -1 |
| LDOS | 18 | 93802 | 4 |
| JHX | 4 | 12557 | 0 |
| Average | 27.6 | 688457 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.6 hedge funds with bullish positions and the average amount invested in these stocks was $688 million. That figure was $580 million in WRK’s case. Dynatrace, Inc. (NYSE:DT) is the most popular stock in this table. On the other hand James Hardie Industries plc (NYSE:JHX) is the least popular one with only 4 bullish hedge fund positions. WestRock Company (NYSE:WRK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WRK is 31.8. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately WRK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WRK investors were disappointed as the stock returned 2% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
