Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Encore Wire Corporation (NASDAQ:WIRE), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Encore Wire Corporation (NASDAQ:WIRE) was in 16 hedge funds’ portfolios at the end of March. WIRE investors should pay attention to an increase in hedge fund sentiment lately. There were 12 hedge funds in our database with WIRE holdings at the end of the previous quarter. Our calculations also showed that WIRE isn’t among the 30 most popular stocks among hedge funds.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.
Let’s take a gander at the recent hedge fund action surrounding Encore Wire Corporation (NASDAQ:WIRE).
What have hedge funds been doing with Encore Wire Corporation (NASDAQ:WIRE)?
At the end of the first quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in WIRE a year ago. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in Encore Wire Corporation (NASDAQ:WIRE), worth close to $7.4 million, accounting for 0.1% of its total 13F portfolio. On Royce & Associates’s heels is GLG Partners, managed by Noam Gottesman, which holds a $7.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions include Jim Simons’s Renaissance Technologies, Paul Marshall and Ian Wace’s Marshall Wace LLP and Cliff Asness’s AQR Capital Management.
As one would reasonably expect, some big names have jumped into Encore Wire Corporation (NASDAQ:WIRE) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, established the biggest position in Encore Wire Corporation (NASDAQ:WIRE). Marshall Wace LLP had $5.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $2.4 million position during the quarter. The other funds with new positions in the stock are Ken Griffin’s Citadel Investment Group, Matthew Hulsizer’s PEAK6 Capital Management, and Benjamin A. Smith’s Laurion Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Encore Wire Corporation (NASDAQ:WIRE) but similarly valued. These stocks are TriCo Bancshares (NASDAQ:TCBK), Teekay LNG Partners L.P. (NYSE:TGP), Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI), and Group 1 Automotive, Inc. (NYSE:GPI). All of these stocks’ market caps are closest to WIRE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TCBK | 9 | 35706 | -1 |
| TGP | 8 | 39655 | 0 |
| SPPI | 13 | 66199 | -4 |
| GPI | 13 | 148023 | 4 |
| Average | 10.75 | 72396 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $42 million in WIRE’s case. Spectrum Pharmaceuticals, Inc. (NASDAQ:SPPI) is the most popular stock in this table. On the other hand Teekay LNG Partners L.P. (NYSE:TGP) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Encore Wire Corporation (NASDAQ:WIRE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately WIRE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WIRE were disappointed as the stock returned -4.5% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
