Hedge Funds Aren’t Crazy About Williams-Sonoma, Inc. (WSM) Anymore

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Williams-Sonoma, Inc. (NYSE:WSM) based on that data.

Is Williams-Sonoma, Inc. (NYSE:WSM) a healthy stock for your portfolio? Hedge funds were getting less bullish. The number of bullish hedge fund positions retreated by 3 lately. Williams-Sonoma, Inc. (NYSE:WSM) was in 31 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that WSM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 34 hedge funds in our database with WSM positions at the end of the second quarter.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Now let’s check out the recent hedge fund action regarding Williams-Sonoma, Inc. (NYSE:WSM).

Peter Algert of Algert Global

Do Hedge Funds Think WSM Is A Good Stock To Buy Now?

At the end of the third quarter, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WSM over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

The largest stake in Williams-Sonoma, Inc. (NYSE:WSM) was held by Select Equity Group, which reported holding $326.9 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $110.6 million position. Other investors bullish on the company included AQR Capital Management, Sirios Capital Management, and ThornTree Capital Partners. In terms of the portfolio weights assigned to each position Calixto Global Investors allocated the biggest weight to Williams-Sonoma, Inc. (NYSE:WSM), around 7.65% of its 13F portfolio. Sirios Capital Management is also relatively very bullish on the stock, dishing out 5.09 percent of its 13F equity portfolio to WSM.

Due to the fact that Williams-Sonoma, Inc. (NYSE:WSM) has witnessed a decline in interest from hedge fund managers, we can see that there was a specific group of money managers who were dropping their entire stakes heading into Q4. At the top of the heap, Ken Griffin’s Citadel Investment Group sold off the largest position of all the hedgies monitored by Insider Monkey, valued at an estimated $46.3 million in stock, and Renaissance Technologies was right behind this move, as the fund cut about $44.4 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 3 funds heading into Q4.

Let’s also examine hedge fund activity in other stocks similar to Williams-Sonoma, Inc. (NYSE:WSM). These stocks are Advance Auto Parts, Inc. (NYSE:AAP), Packaging Corporation Of America (NYSE:PKG), Telefonica Brasil SA (NYSE:VIV), The J.M. Smucker Company (NYSE:SJM), W.R. Berkley Corporation (NYSE:WRB), Fidelity National Financial Inc (NYSE:FNF), and Lincoln National Corporation (NYSE:LNC). This group of stocks’ market values match WSM’s market value.

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As you can see these stocks had an average of 25.4 hedge funds with bullish positions and the average amount invested in these stocks was $635 million. That figure was $731 million in WSM’s case. Advance Auto Parts, Inc. (NYSE:AAP) is the most popular stock in this table. On the other hand Telefonica Brasil SA (NYSE:VIV) is the least popular one with only 5 bullish hedge fund positions. Williams-Sonoma, Inc. (NYSE:WSM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WSM is 72.7. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on WSM as the stock returned 10.3% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.