We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Wolverine World Wide, Inc. (NYSE:WWW).
Wolverine World Wide, Inc. (NYSE:WWW) was in 19 hedge funds’ portfolios at the end of September. WWW has experienced an increase in enthusiasm from smart money of late. There were 12 hedge funds in our database with WWW positions at the end of the previous quarter. Our calculations also showed that WWW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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. 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Chuck Royce of Royce & Associates
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to analyze the key hedge fund action regarding Wolverine World Wide, Inc. (NYSE:WWW).
How have hedgies been trading Wolverine World Wide, Inc. (NYSE:WWW)?
Heading into the fourth quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 58% from the previous quarter. By comparison, 13 hedge funds held shares or bullish call options in WWW a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Wolverine World Wide, Inc. (NYSE:WWW), which was worth $19.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $12 million worth of shares. Diamond Hill Capital, Citadel Investment Group, and Ancora Advisors 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 Ancora Advisors allocated the biggest weight to Wolverine World Wide, Inc. (NYSE:WWW), around 0.18% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.18 percent of its 13F equity portfolio to WWW.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Wolverine World Wide, Inc. (NYSE:WWW) headfirst. Diamond Hill Capital, managed by Ric Dillon, initiated the most valuable position in Wolverine World Wide, Inc. (NYSE:WWW). Diamond Hill Capital had $10.6 million invested in the company at the end of the quarter. Frederick DiSanto’s Ancora Advisors also made a $4.2 million investment in the stock during the quarter. The following funds were also among the new WWW investors: David Harding’s Winton Capital Management, Mike Vranos’s Ellington, and Philippe Laffont’s Coatue Management.
Let’s go over hedge fund activity in other stocks similar to Wolverine World Wide, Inc. (NYSE:WWW). These stocks are MyoKardia, Inc. (NASDAQ:MYOK), Urban Edge Properties (NYSE:UE), PROS Holdings, Inc. (NYSE:PRO), and AAON, Inc. (NASDAQ:AAON). This group of stocks’ market valuations match WWW’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MYOK | 23 | 785760 | -1 |
| UE | 12 | 93998 | 0 |
| PRO | 24 | 239879 | 8 |
| AAON | 6 | 4449 | 0 |
| Average | 16.25 | 281022 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $281 million. That figure was $70 million in WWW’s case. PROS Holdings, Inc. (NYSE:PRO) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 6 bullish hedge fund positions. Wolverine World Wide, Inc. (NYSE:WWW) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on WWW as the stock returned 13.6% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
