Here is What Hedge Funds Think About The Williams Companies, Inc. (WMB)

After several tireless days we have finished crunching the numbers from nearly 900 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards The Williams Companies, Inc. (NYSE:WMB).

The Williams Companies, Inc. (NYSE:WMB) shareholders have witnessed an increase in support from the world’s most elite money managers lately. The Williams Companies, Inc. (NYSE:WMB) was in 39 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 73. There were 34 hedge funds in our database with WMB positions at the end of the first quarter. Our calculations also showed that WMB isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Mason Hawkins of Southeastern Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, we like undervalued, EBITDA-positive growth stocks, so we are checking out stock pitches like this emerging biotech stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to take a glance at the latest hedge fund action surrounding The Williams Companies, Inc. (NYSE:WMB).

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

At the end of June, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the first quarter of 2020. By comparison, 41 hedge funds held shares or bullish call options in WMB a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Southeastern Asset Management held the most valuable stake in The Williams Companies, Inc. (NYSE:WMB), which was worth $207.4 million at the end of the second quarter. On the second spot was Millennium Management which amassed $79.2 million worth of shares. Polaris Capital Management, Adage Capital Management, and Balyasny Asset 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 Heronetta Management allocated the biggest weight to The Williams Companies, Inc. (NYSE:WMB), around 5.85% of its 13F portfolio. Southeastern Asset Management is also relatively very bullish on the stock, designating 4.17 percent of its 13F equity portfolio to WMB.

As one would reasonably expect, some big names were leading the bulls’ herd. Renaissance Technologies, assembled the most outsized position in The Williams Companies, Inc. (NYSE:WMB). Renaissance Technologies had $18.6 million invested in the company at the end of the quarter. James Dondero’s Highland Capital Management also made a $15.1 million investment in the stock during the quarter. The following funds were also among the new WMB investors: Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors, Sander Gerber’s Hudson Bay Capital Management, and Brandon Haley’s Holocene Advisors.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as The Williams Companies, Inc. (NYSE:WMB) but similarly valued. We will take a look at Mettler-Toledo International Inc. (NYSE:MTD), ArcelorMittal (NYSE:MT), V.F. Corporation (NYSE:VFC), AutoZone, Inc. (NYSE:AZO), Datadog, Inc. (NASDAQ:DDOG), NatWest Group plc (NYSE:NWG), and Valero Energy Corporation (NYSE:VLO). This group of stocks’ market values match WMB’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $1052 million. That figure was $551 million in WMB’s case. Datadog, Inc. (NASDAQ:DDOG) is the most popular stock in this table. On the other hand NatWest Group plc (NYSE:NWG) is the least popular one with only 5 bullish hedge fund positions. The Williams Companies, Inc. (NYSE:WMB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WMB is 59.4. 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 21.8% in 2021 through October 11th and still beat the market by 4.4 percentage points. Hedge funds were also right about betting on WMB as the stock returned 9.7% since the end of Q2 (through 10/11) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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