Hedge Funds Have Never Been More Bullish On Walmart Inc. (WMT)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on June 30th. We at Insider Monkey have made an extensive database of more than 873 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Walmart Inc. (NYSE:WMT) based on those filings.

Walmart Inc. (NYSE:WMT) was in 71 hedge funds’ portfolios at the end of June. The all time high for this statistic is 71. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. WMT investors should be aware of an increase in hedge fund interest lately. There were 58 hedge funds in our database with WMT positions at the end of the first quarter. Our calculations also showed that WMT isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Peter Rathjens of Arrowstreet Capital

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. With all of this in mind we’re going to take a look at the new hedge fund action encompassing Walmart Inc. (NYSE:WMT).

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

Heading into the third quarter of 2021, a total of 71 of the hedge funds tracked by Insider Monkey were long this stock, a change of 22% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WMT over the last 24 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the biggest position in Walmart Inc. (NYSE:WMT). Fisher Asset Management has a $1.7805 billion position in the stock, comprising 1.1% of its 13F portfolio. The second largest stake is held by Bill & Melinda Gates Foundation Trust, managed by Michael Larson, which holds a $1.0719 billion position; 4.5% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, D. E. Shaw’s D E Shaw and Ray Dalio’s Bridgewater Associates. In terms of the portfolio weights assigned to each position Empirical Capital Partners allocated the biggest weight to Walmart Inc. (NYSE:WMT), around 9.8% of its 13F portfolio. Pittencrieff Partners – Gabalex Capital is also relatively very bullish on the stock, designating 6.97 percent of its 13F equity portfolio to WMT.

Now, specific money managers have been driving this bullishness. Holocene Advisors, managed by Brandon Haley, assembled the biggest position in Walmart Inc. (NYSE:WMT). Holocene Advisors had $77.2 million invested in the company at the end of the quarter. Joseph Samuels’s Islet Management also initiated a $70.5 million position during the quarter. The other funds with new positions in the stock are Gregg Moskowitz’s Interval Partners, Michael Burry’s Scion Asset Management, and Anthony Joseph Vaccarino’s North Fourth Asset Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Walmart Inc. (NYSE:WMT) but similarly valued. These stocks are UnitedHealth Group Inc. (NYSE:UNH), Mastercard Incorporated (NYSE:MA), Bank of America Corporation (NYSE:BAC), Paypal Holdings Inc (NASDAQ:PYPL), The Home Depot, Inc. (NYSE:HD), The Procter & Gamble Company (NYSE:PG), and The Walt Disney Company (NYSE:DIS). This group of stocks’ market valuations resemble WMT’s market valuation.

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As you can see these stocks had an average of 105 hedge funds with bullish positions and the average amount invested in these stocks was $16436 million. That figure was $8048 million in WMT’s case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand The Home Depot, Inc. (NYSE:HD) is the least popular one with only 64 bullish hedge fund positions. Walmart Inc. (NYSE:WMT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WMT is 43.8. 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 24.1% in 2021 through September 20th and surpassed the market again by 6.9 percentage points. Unfortunately WMT wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WMT investors were disappointed as the stock returned 1.6% since the end of June (through 9/20) 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.

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