As we already know from media reports and hedge fund investor letters, hedge funds delivered their best returns in a decade. Most investors who decided to stick with hedge funds after a rough 2018 recouped their losses by the end of the fourth quarter of 2019. A significant number of hedge funds continued their strong performance in 2020 and 2021 as well. We get to see hedge funds’ thoughts towards the market and individual stocks by aggregating their quarterly portfolio movements and reading their investor letters. In this article, we will particularly take a look at what hedge funds think about WNS (Holdings) Limited (NYSE:WNS).
Is WNS (Holdings) Limited (NYSE:WNS) undervalued? The best stock pickers were cutting their exposure. The number of long hedge fund bets were trimmed by 1 in recent months. WNS (Holdings) Limited (NYSE:WNS) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistic is 23. Our calculations also showed that WNS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 21 hedge funds in our database with WNS holdings at the end of March.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to check out the new hedge fund action regarding WNS (Holdings) Limited (NYSE:WNS).
Do Hedge Funds Think WNS Is A Good Stock To Buy Now?
At Q2’s end, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WNS over the last 24 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
Among these funds, Diamond Hill Capital held the most valuable stake in WNS (Holdings) Limited (NYSE:WNS), which was worth $84.3 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $83.6 million worth of shares. GLG Partners, Fisher Asset Management, and Arrowstreet Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Intrepid Capital Management allocated the biggest weight to WNS (Holdings) Limited (NYSE:WNS), around 3.78% of its 13F portfolio. Old Well Partners is also relatively very bullish on the stock, setting aside 3.51 percent of its 13F equity portfolio to WNS.
Judging by the fact that WNS (Holdings) Limited (NYSE:WNS) has experienced declining sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedge funds that elected to cut their positions entirely last quarter. It’s worth mentioning that Ken Grossman and Glen Schneider’s SG Capital Management dropped the largest position of the 750 funds monitored by Insider Monkey, comprising close to $7.9 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund cut about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as WNS (Holdings) Limited (NYSE:WNS) but similarly valued. We will take a look at Qualys Inc (NASDAQ:QLYS), EPR Properties (NYSE:EPR), F.N.B. Corp (NYSE:FNB), Alkermes Plc (NASDAQ:ALKS), Option Care Health, Inc. (NASDAQ:OPCH), Sabra Health Care REIT Inc (NASDAQ:SBRA), and Glaukos Corporation (NYSE:GKOS). All of these stocks’ market caps are closest to WNS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QLYS | 20 | 214955 | 8 |
| EPR | 20 | 231012 | 5 |
| FNB | 16 | 55892 | 0 |
| ALKS | 36 | 897660 | 5 |
| OPCH | 31 | 342676 | 0 |
| SBRA | 14 | 100037 | -7 |
| GKOS | 19 | 51490 | 1 |
| Average | 22.3 | 270532 | 1.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.3 hedge funds with bullish positions and the average amount invested in these stocks was $271 million. That figure was $294 million in WNS’s case. Alkermes Plc (NASDAQ:ALKS) is the most popular stock in this table. On the other hand Sabra Health Care REIT Inc (NASDAQ:SBRA) is the least popular one with only 14 bullish hedge fund positions. WNS (Holdings) Limited (NYSE:WNS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WNS is 43.7. 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. 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 October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on WNS as the stock returned 5.9% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.
Follow Wns (Holdings) Ltd (NYSE:WNS)
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Disclosure: None. This article was originally published at Insider Monkey.
