Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Whirlpool Corporation (NYSE:WHR).
Whirlpool Corporation (NYSE:WHR) has experienced an increase in support from the world’s most elite money managers in recent months. Our calculations also showed that WHR isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a glance at the recent hedge fund action surrounding Whirlpool Corporation (NYSE:WHR).
What have hedge funds been doing with Whirlpool Corporation (NYSE:WHR)?
At Q2’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WHR over the last 16 quarters. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Greenhaven Associates held the most valuable stake in Whirlpool Corporation (NYSE:WHR), which was worth $401.4 million at the end of the second quarter. On the second spot was Marshall Wace LLP which amassed $38.4 million worth of shares. Moreover, Markel Gayner Asset Management, Citadel Investment Group, and D E Shaw were also bullish on Whirlpool Corporation (NYSE:WHR), allocating a large percentage of their portfolios to this stock.
With a general bullishness amongst the heavyweights, specific money managers have jumped into Whirlpool Corporation (NYSE:WHR) headfirst. D E Shaw, managed by D. E. Shaw, established the most outsized position in Whirlpool Corporation (NYSE:WHR). D E Shaw had $20.5 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $15.4 million position during the quarter. The other funds with new positions in the stock are David Costen Haley’s HBK Investments, Lee Ainslie’s Maverick Capital, and Anthony Scaramucci’s Skybridge Capital.
Let’s go over hedge fund activity in other stocks similar to Whirlpool Corporation (NYSE:WHR). These stocks are Black Knight, Inc. (NYSE:BKI), Lamb Weston Holdings, Inc. (NYSE:LW), Huaneng Power International Inc (NYSE:HNP), and Targa Resources Corp (NYSE:TRGP). All of these stocks’ market caps resemble WHR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BKI | 45 | 1016444 | 5 |
| LW | 29 | 518866 | -12 |
| HNP | 3 | 2350 | 0 |
| TRGP | 18 | 206424 | -5 |
| Average | 23.75 | 436021 | -3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $436 million. That figure was $571 million in WHR’s case. Black Knight, Inc. (NYSE:BKI) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 3 bullish hedge fund positions. Whirlpool Corporation (NYSE:WHR) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on WHR as the stock returned 12.2% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
