We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (read our latest 10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 835 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Waters Corporation (NYSE:WAT).
Waters Corporation (NYSE:WAT) shareholders have witnessed a decrease in enthusiasm from smart money lately. Our calculations also showed that WAT isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
If you’d ask most shareholders, hedge funds are seen as unimportant, outdated financial vehicles of years past. While there are greater than 8000 funds in operation at present, Our researchers hone in on the leaders of this club, about 850 funds. It is estimated that this group of investors direct the lion’s share of the smart money’s total capital, and by tracking their top equity investments, Insider Monkey has unearthed many investment strategies that have historically exceeded the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Noam Gottesman of GLG Partners
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s go over the new hedge fund action surrounding Waters Corporation (NYSE:WAT).
Hedge fund activity in Waters Corporation (NYSE:WAT)
Heading into the first quarter of 2020, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WAT over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, GLG Partners held the most valuable stake in Waters Corporation (NYSE:WAT), which was worth $121.8 million at the end of the third quarter. On the second spot was Impax Asset Management which amassed $109.8 million worth of shares. Select Equity Group, Generation Investment Management, and AQR Capital Management 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 Impax Asset Management allocated the biggest weight to Waters Corporation (NYSE:WAT), around 1.23% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, dishing out 0.62 percent of its 13F equity portfolio to WAT.
Seeing as Waters Corporation (NYSE:WAT) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few fund managers that elected to cut their positions entirely in the third quarter. Intriguingly, Renaissance Technologies said goodbye to the largest investment of the “upper crust” of funds followed by Insider Monkey, comprising about $17.9 million in stock, and Phill Gross and Robert Atchinson’s Adage Capital Management was right behind this move, as the fund dumped about $9.2 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Waters Corporation (NYSE:WAT) but similarly valued. We will take a look at Mid America Apartment Communities Inc (NYSE:MAA), Westinghouse Air Brake Technologies Corp (NYSE:WAB), Wynn Resorts, Limited (NASDAQ:WYNN), and Campbell Soup Company (NYSE:CPB). All of these stocks’ market caps are closest to WAT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MAA | 24 | 234313 | 4 |
| WAB | 41 | 2013819 | 5 |
| WYNN | 44 | 1066566 | 6 |
| CPB | 29 | 1025914 | -5 |
| Average | 34.5 | 1085153 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.5 hedge funds with bullish positions and the average amount invested in these stocks was $1085 million. That figure was $568 million in WAT’s case. Wynn Resorts, Limited (NASDAQ:WYNN) is the most popular stock in this table. On the other hand Mid America Apartment Communities Inc (NYSE:MAA) is the least popular one with only 24 bullish hedge fund positions. Waters Corporation (NYSE:WAT) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately WAT wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WAT investors were disappointed as the stock returned -25.6% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
