Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Woodward Inc (NASDAQ:WWD).
Is Woodward Inc (NASDAQ:WWD) the right investment to pursue these days? Money managers were buying. The number of long hedge fund positions advanced by 8 lately. Woodward Inc (NASDAQ:WWD) was in 27 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 28. Our calculations also showed that WWD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
Boykin Curry of Eagle Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. Keeping this in mind let’s take a look at the latest hedge fund action encompassing Woodward Inc (NASDAQ:WWD).
Do Hedge Funds Think WWD Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 42% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WWD over the last 23 quarters. 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, Deccan Value Advisors held the most valuable stake in Woodward Inc (NASDAQ:WWD), which was worth $248.7 million at the end of the fourth quarter. On the second spot was Eagle Capital Management which amassed $206.5 million worth of shares. Citadel Investment Group, Royce & Associates, and Millennium 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 0 allocated the biggest weight to Woodward Inc (NASDAQ:WWD), around 11.01% of its 13F portfolio. 0 is also relatively very bullish on the stock, setting aside 1.33 percent of its 13F equity portfolio to WWD.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Islet Management, managed by Joseph Samuels, initiated the largest position in Woodward Inc (NASDAQ:WWD). Islet Management had $9.2 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also initiated a $8.4 million position during the quarter. The other funds with new positions in the stock are Parvinder Thiara’s Athanor Capital, D. E. Shaw’s D E Shaw, and Alec Litowitz and Ross Laser’s Magnetar Capital.
Let’s now take a look at hedge fund activity in other stocks similar to Woodward Inc (NASDAQ:WWD). These stocks are Smartsheet Inc. (NYSE:SMAR), SiteOne Landscape Supply, Inc. (NYSE:SITE), CubeSmart (NYSE:CUBE), Jefferies Financial Group Inc. (NYSE:JEF), PVH Corp (NYSE:PVH), InVitae Corporation (NYSE:NVTA), and Cabot Oil & Gas Corporation (NYSE:COG). This group of stocks’ market valuations are closest to WWD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SMAR | 39 | 1490070 | -6 |
| SITE | 16 | 67390 | -1 |
| CUBE | 25 | 350765 | 1 |
| JEF | 38 | 700629 | 5 |
| PVH | 34 | 1234659 | -3 |
| NVTA | 34 | 2759303 | -1 |
| COG | 20 | 135171 | 1 |
| Average | 29.4 | 962570 | -0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.4 hedge funds with bullish positions and the average amount invested in these stocks was $963 million. That figure was $643 million in WWD’s case. Smartsheet Inc. (NYSE:SMAR) is the most popular stock in this table. On the other hand SiteOne Landscape Supply, Inc. (NYSE:SITE) is the least popular one with only 16 bullish hedge fund positions. Woodward Inc (NASDAQ:WWD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WWD is 62.8. 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. 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 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 24% in 2021 through July 9th and surpassed the market again by 6.7 percentage points. Unfortunately WWD wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WWD investors were disappointed as the stock returned 2.1% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
