Here is What Hedge Funds Think About Williams-Sonoma, Inc. (WSM)

Hedge funds are not perfect. They have their bad picks just like everyone else. Valeant, a stock hedge funds have loved, lost 79% during the last 12 months ending in November 21. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 30 mid-cap stocks among the best performing hedge funds yielded an average return of 18% in the same time period, vs. a gain of 7.6% for the S&P 500 Index. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the successful funds think of Williams-Sonoma, Inc. (NYSE:WSM) .

Williams-Sonoma, Inc. (NYSE:WSM) shares didn’t see a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 18 hedge funds’ portfolios at the end of September. 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 Tahoe Resources Inc (NYSE:TAHO), Tesoro Logistics LP (NYSE:TLLP), and Manhattan Associates, Inc. (NASDAQ:MANH) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.

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Keeping this in mind, we’re going to view the latest action surrounding Williams-Sonoma, Inc. (NYSE:WSM).

What have hedge funds been doing with Williams-Sonoma, Inc. (NYSE:WSM)?

Heading into the fourth quarter of 2016, a total of 18 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the second quarter of 2016. On the other hand, there were a total of 21 hedge funds with a bullish position in WSM at the beginning of this year. With hedgies’ sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the biggest position in Williams-Sonoma, Inc. (NYSE:WSM), worth close to $349.1 million, corresponding to 3% of its total 13F portfolio. On Select Equity Group’s heels is Scopus Asset Management, led by Alexander Mitchell, holding a $30.6 million call position; the fund has 0.5% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors that are bullish include John Overdeck and David Siegel’s Two Sigma Advisors, 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.

Judging by the fact that Williams-Sonoma, Inc. (NYSE:WSM) has encountered no change in interest from the smart money, it’s important to take a look at a select few money managers who sold off their positions entirely last quarter. Intriguingly, Gregg Moskowitz’s Interval Partners got rid of the largest stake of the 700 funds tracked by Insider Monkey, comprising an estimated $35.5 million in stock. Jim Simons’s Renaissance Technologies also said goodbye to its stock, about $35.3 million worth of WSM shares.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Williams-Sonoma, Inc. (NYSE:WSM) but similarly valued. We will take a look at Tahoe Resources Inc (NYSE:TAHO), Tesoro Logistics LP (NYSE:TLLP), Manhattan Associates, Inc. (NASDAQ:MANH), and Commerce Bancshares, Inc. (NASDAQ:CBSH). This group of stocks’ market valuations match WSM’s market valuation.

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 $99 million. That figure was $459 million in WSM’s case. Tahoe Resources Inc (NYSE:TAHO) is the most popular stock in this table. On the other hand Tesoro Logistics LP (NYSE:TLLP) is the least popular one with only 6 bullish hedge fund positions. Williams-Sonoma, Inc. (NYSE:WSM) 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 TAHO might be a better candidate to consider taking a long position in.

Disclosure: none.