We at Insider Monkey have gone over 867 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of Watsco Inc (NYSE:WSO) based on that data.
Watsco Inc (NYSE:WSO) shareholders have witnessed an increase in enthusiasm from smart money lately. Watsco Inc (NYSE:WSO) was in 30 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 29. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 26 hedge funds in our database with WSO positions at the end of the second quarter. Our calculations also showed that WSO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
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. With all of this in mind we’re going to view the key hedge fund action regarding Watsco Inc (NYSE:WSO).
Tom Gayner of Markel Gayner Asset Management
Do Hedge Funds Think WSO Is A Good Stock To Buy Now?
At Q3’s end, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of 15% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in WSO over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Watsco Inc (NYSE:WSO) was held by Markel Gayner Asset Management, which reported holding $109.6 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $63.1 million position. Other investors bullish on the company included Motley Fool Asset Management, AQR Capital Management, and Balyasny Asset Management. In terms of the portfolio weights assigned to each position Motley Fool Asset Management allocated the biggest weight to Watsco Inc (NYSE:WSO), around 3.14% of its 13F portfolio. Markel Gayner Asset Management is also relatively very bullish on the stock, earmarking 1.39 percent of its 13F equity portfolio to WSO.
Consequently, key money managers were breaking ground themselves. Point72 Asset Management, managed by Steve Cohen, created the most valuable position in Watsco Inc (NYSE:WSO). Point72 Asset Management had $6.9 million invested in the company at the end of the quarter. Richard Driehaus’s Driehaus Capital also initiated a $5.6 million position during the quarter. The other funds with brand new WSO positions are Clint Carlson’s Carlson Capital, Paul Marshall and Ian Wace’s Marshall Wace LLP, and Gavin Saitowitz and Cisco J. del Valle’s Prelude Capital (previously Springbok Capital).
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Watsco Inc (NYSE:WSO) but similarly valued. These stocks are agilon health inc. (NYSE:AGL), Oak Street Health, Inc. (NYSE:OSH), QuantumScape Corporation (NYSE:QS), CureVac N.V. (NASDAQ:CVAC), First Solar, Inc. (NASDAQ:FSLR), Brookfield Renewable Partners L.P. (NYSE:BEP), and Magellan Midstream Partners, L.P. (NYSE:MMP). All of these stocks’ market caps are closest to WSO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGL | 18 | 270101 | -1 |
| OSH | 19 | 395210 | -14 |
| QS | 25 | 197413 | -1 |
| CVAC | 10 | 45690 | -2 |
| FSLR | 31 | 266584 | 0 |
| BEP | 17 | 145164 | -3 |
| MMP | 12 | 92094 | -1 |
| Average | 18.9 | 201751 | -3.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.9 hedge funds with bullish positions and the average amount invested in these stocks was $202 million. That figure was $415 million in WSO’s case. First Solar, Inc. (NASDAQ:FSLR) is the most popular stock in this table. On the other hand CureVac N.V. (NASDAQ:CVAC) is the least popular one with only 10 bullish hedge fund positions. Watsco Inc (NYSE:WSO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WSO is 86.6. 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 WSO as the stock returned 11.4% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Watsco Inc (NYSE:WSO; WSOB)
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Disclosure: None. This article was originally published at Insider Monkey.
