Is WildHorse Resource Development Corporation (NYSE:WRD) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, expert networks, and get tips from industry insiders. They sometimes fail miserably but historically their consensus stock picks outperformed the market after adjusting for known risk factors.
WildHorse Resource Development Corporation (NYSE:WRD) was in 20 hedge funds’ portfolios at the end of September. WRD investors should be aware of a decrease in support from the world’s most elite money managers in recent months. There were 25 hedge funds in our database with WRD positions at the end of the previous quarter. Our calculations also showed that WRD isn’t among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s check out the recent hedge fund action regarding WildHorse Resource Development Corporation (NYSE:WRD).
How are hedge funds trading WildHorse Resource Development Corporation (NYSE:WRD)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WRD over the last 13 quarters. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Steve Cohen’s Point72 Asset Management has the most valuable position in WildHorse Resource Development Corporation (NYSE:WRD), worth close to $14.7 million, comprising 0.1% of its total 13F portfolio. Coming in second is David Keidan of Buckingham Capital Management, with a $14.3 million position; the fund has 1.5% of its 13F portfolio invested in the stock. Some other peers that hold long positions comprise Brett Hendrickson’s Nokomis Capital, Wayne Cooperman’s Cobalt Capital Management and D. E. Shaw’s D E Shaw.
Since WildHorse Resource Development Corporation (NYSE:WRD) has faced a decline in interest from the smart money, we can see that there were a few hedgies that slashed their positions entirely in the third quarter. At the top of the heap, John Labanowski’s Brenham Capital Management dumped the largest stake of the “upper crust” of funds watched by Insider Monkey, comprising an estimated $42.6 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund said goodbye to about $19.6 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 5 funds in the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as WildHorse Resource Development Corporation (NYSE:WRD) but similarly valued. These stocks are Advanced Disposal Services, Inc. (NYSE:ADSW), AnaptysBio, Inc. (NASDAQ:ANAB), Commercial Metals Company (NYSE:CMC), and Plantronics, Inc. (NYSE:PLT). This group of stocks’ market valuations resemble WRD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADSW | 12 | 182428 | -4 |
| ANAB | 22 | 950259 | 4 |
| CMC | 18 | 178814 | 1 |
| PLT | 25 | 184247 | 6 |
| Average | 19.25 | 373937 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $374 million. That figure was $99 million in WRD’s case. Plantronics, Inc. (NYSE:PLT) is the most popular stock in this table. On the other hand Advanced Disposal Services, Inc. (NYSE:ADSW) is the least popular one with only 12 bullish hedge fund positions. WildHorse Resource Development Corporation (NYSE:WRD) 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 PLT might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
