Here is What Hedge Funds Think About Towers Watson & Co (TW)

World-class money managers like Bill Ackman and Barry Rosenstein only invest their wealthy clients’ money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It’s not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It’s also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.

Towers Watson & Co (NASDAQ:TW) has seen an increase in hedge fund interest in recent months. TW was in 37 hedge funds’ portfolios at the end of September. There were 24 hedge funds in our database with TW holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as JetBlue Airways Corporation (NASDAQ:JBLU), SCANA Corporation (NYSE:SCG), and Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR) to gather more data points.

Keeping this in mind, let’s take a glance at the recent action regarding Towers Watson & Co (NASDAQ:TW).

Hedge fund activity in Towers Watson & Co (NASDAQ:TW)

At Q3’s end, a total of 37 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 54% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, John Armitage’s Egerton Capital Limited has the number one position in Towers Watson & Co (NASDAQ:TW), worth close to $349.9 million, accounting for 4% of its total 13F portfolio. The second largest stake is held by Naya Capital, led by Masroor Siddiqui and Bruce Emery, holding a $162.1 million position; 8.8% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism include Scott McLellan’s Marble Arch Investments, Richard Driehaus’ Driehaus Capital and John Overdeck and David Siegel’s Two Sigma Advisors.

Now, key hedge funds have been driving this bullishness. Egerton Capital Limited, managed by John Armitage, initiated the most valuable position in Towers Watson & Co (NASDAQ:TW). Egerton Capital Limited had $349.9 million invested in the company at the end of the quarter. Scott McLellan’s Marble Arch Investments also initiated a $135.2 million position during the quarter. The other funds with new positions in the stock are Richard Driehaus’ Driehaus Capital, Jim Simons’ Renaissance Technologies, and Jeffrey Ubben’s ValueAct Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Towers Watson & Co (NASDAQ:TW) but similarly valued. We will take a look at JetBlue Airways Corporation (NASDAQ:JBLU), SCANA Corporation (NYSE:SCG), Green Mountain Coffee Roasters Inc. (NASDAQ:GMCR), and New York Community Bancorp, Inc. (NYSE:NYCB). All of these stocks’ market caps match TW’s market cap.

As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $346 million. That figure was $1,226 million in TW’s case. JetBlue Airways Corporation (NASDAQ:JBLU) is the most popular stock in this table. On the other hand SCANA Corporation (NYSE:SCG) is the least popular one with only 12 bullish hedge fund positions. Towers Watson & Co (NASDAQ:TW) 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 JBLU might be a better candidate to consider a long position.