Hedge Funds Have Never Been This Bullish On Western Digital Corporation (WDC)

In this article we will check out the progression of hedge fund sentiment towards Western Digital Corporation (NASDAQ:WDC) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Western Digital Corporation (NASDAQ:WDC) shareholders have witnessed an increase in enthusiasm from smart money of late. Western Digital Corporation (NASDAQ:WDC) was in 58 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic was previously 56. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WDC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

To most stock holders, hedge funds are viewed as slow, outdated investment vehicles of years past. While there are over 8000 funds in operation at the moment, Our researchers hone in on the moguls of this group, around 850 funds. These investment experts administer the majority of the smart money’s total asset base, and by following their best equity investments, Insider Monkey has determined numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

Ryan Tolkin, CIO of Schonfeld Strategic Advisors

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

At first quarter’s end, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 32% from the previous quarter. By comparison, 45 hedge funds held shares or bullish call options in WDC a year ago. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Point72 Asset Management, managed by Steve Cohen, holds the most valuable position in Western Digital Corporation (NASDAQ:WDC). Point72 Asset Management has a $361 million position in the stock, comprising 1.7% of its 13F portfolio. The second largest stake is held by Lyrical Asset Management, led by Andrew Wellington and Jeff Keswin, holding a $305.5 million position; 3.6% of its 13F portfolio is allocated to the stock. Remaining peers with similar optimism include Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Israel Englander’s Millennium Management and David Fear’s Thunderbird Partners. In terms of the portfolio weights assigned to each position Shelter Haven Capital Management allocated the biggest weight to Western Digital Corporation (NASDAQ:WDC), around 14.69% of its 13F portfolio. Thunderbird Partners is also relatively very bullish on the stock, earmarking 11.74 percent of its 13F equity portfolio to WDC.

As aggregate interest increased, some big names have jumped into Western Digital Corporation (NASDAQ:WDC) headfirst. Shelter Haven Capital Management, managed by Jerry Kochanski, assembled the biggest position in Western Digital Corporation (NASDAQ:WDC). Shelter Haven Capital Management had $46.6 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also initiated a $31.1 million position during the quarter. The other funds with new positions in the stock are Israel Englander’s Millennium Management, John Hurley’s Cavalry Asset Management, and Michael Gelband’s ExodusPoint Capital.

Let’s go over hedge fund activity in other stocks similar to Western Digital Corporation (NASDAQ:WDC). These stocks are Take-Two Interactive Software, Inc. (NASDAQ:TTWO), Teradyne, Inc. (NASDAQ:TER), Vipshop Holdings Limited (NYSE:VIPS), Fortis Inc. (NYSE:FTS), Cheniere Energy Partners LP (NYSE:CQP), Entergy Corporation (NYSE:ETR), and Ventas, Inc. (NYSE:VTR). All of these stocks’ market caps resemble WDC’s market cap.

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As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $718 million. That figure was $1914 million in WDC’s case. Vipshop Holdings Limited (NYSE:VIPS) is the most popular stock in this table. On the other hand Cheniere Energy Partners LP (NYSE:CQP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Western Digital Corporation (NASDAQ:WDC) is more popular among hedge funds. Our overall hedge fund sentiment score for WDC is 90. 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 returned 17.2% in 2021 through June 11th but still managed to beat the market by 3.3 percentage points. Hedge funds were also right about betting on WDC as the stock returned 12% since the end of March (through 6/11) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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