The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Waddell & Reed Financial, Inc. (NYSE:WDR).
Waddell & Reed Financial, Inc. (NYSE:WDR) has experienced an increase in hedge fund interest recently. WDR was in 15 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with WDR holdings at the end of the previous quarter. At the end of this article we will also compare WDR to other stocks including MRC Global Inc (NYSE:MRC), Simmons First National Corporation (NASDAQ:SFNC), and Spark Therapeutics Inc (NASDAQ:ONCE) to get a better sense of its popularity.
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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What does the smart money think about Waddell & Reed Financial, Inc. (NYSE:WDR)?
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a 15% gain from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in WDR at the beginning of this year, so hedge fund ownership of the stock is still down in 2016. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’ AQR Capital Management has the most valuable position in Waddell & Reed Financial, Inc. (NYSE:WDR), worth close to $40.9 million. The second most bullish fund manager is Fisher Asset Management, led by Ken Fisher, which holds a $35.2 million position. Remaining members of the smart money that are bullish consist of Mario Gabelli’s GAMCO Investors, Israel Englander’s Millennium Management, and Ken Griffin’s Citadel Investment Group. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As industry-wide interest jumped, specific money managers have been driving this bullishness. Hutchin Hill Capital, led by Neil Chriss, created the largest position in Waddell & Reed Financial, Inc. (NYSE:WDR). Hutchin Hill Capital had $1.2 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $1.2 million investment in the stock during the quarter. The following funds were also among the new WDR investors: Joe DiMenna’s ZWEIG DIMENNA PARTNERS and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks similar to Waddell & Reed Financial, Inc. (NYSE:WDR). These stocks are MRC Global Inc (NYSE:MRC), Simmons First National Corporation (NASDAQ:SFNC), Spark Therapeutics Inc (NASDAQ:ONCE), and World Wrestling Entertainment, Inc. (NYSE:WWE). This group of stocks’ market values resemble WDR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRC | 20 | 231399 | -2 |
| SFNC | 6 | 9290 | 0 |
| ONCE | 13 | 194892 | -3 |
| WWE | 13 | 141372 | 3 |
As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $119 million in WDR’s case. MRC Global Inc (NYSE:MRC) is the most popular stock in this table. On the other hand Simmons First National Corporation (NASDAQ:SFNC) is the least popular one with only 6 bullish hedge fund positions. Waddell & Reed Financial, Inc. (NYSE:WDR) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MRC might be a better candidate to consider taking a long position in.
Disclosure: None
