Here is What Hedge Funds Think About WW International, Inc. (WW)

Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed in recent years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that certain hedge funds do have great stock picking skills (and we can identify these hedge funds in advance pretty accurately), so let’s take a glance at the smart money sentiment towards WW International, Inc. (NASDAQ:WW).

Is WW International, Inc. (NASDAQ:WW) worth your attention right now? Money managers were in a bearish mood. The number of long hedge fund bets shrunk by 3 lately. WW International, Inc. (NASDAQ:WW) was in 24 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 37. Our calculations also showed that WW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. With all of this in mind we’re going to take a peek at the latest hedge fund action regarding WW International, Inc. (NASDAQ:WW).

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

At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -11% from one quarter earlier. By comparison, 27 hedge funds held shares or bullish call options in WW a year ago. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

Among these funds, Rima Senvest Management held the most valuable stake in WW International, Inc. (NASDAQ:WW), which was worth $75.4 million at the end of the third quarter. On the second spot was Miller Value Partners which amassed $67.6 million worth of shares. Stadium Capital Management, Sessa Capital, and Melvin Capital 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 Stadium Capital Management allocated the biggest weight to WW International, Inc. (NASDAQ:WW), around 22.84% of its 13F portfolio. ThornTree Capital Partners is also relatively very bullish on the stock, designating 3.44 percent of its 13F equity portfolio to WW.

Because WW International, Inc. (NASDAQ:WW) has witnessed declining sentiment from the entirety of the hedge funds we track, logic holds that there exists a select few funds who sold off their positions entirely heading into Q4. At the top of the heap, Gabriel Plotkin’s Melvin Capital Management sold off the biggest investment of the “upper crust” of funds followed by Insider Monkey, worth close to $101.2 million in stock. Michael A. Price and Amos Meron’s fund, Empyrean Capital Partners, also dumped its stock, about $15 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest dropped by 3 funds heading into Q4.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as WW International, Inc. (NASDAQ:WW) but similarly valued. These stocks are Enova International Inc (NYSE:ENVA), Heartland Express, Inc. (NASDAQ:HTLD), Archrock, Inc. (NYSE:AROC), Echo Global Logistics, Inc. (NASDAQ:ECHO), Addus Homecare Corporation (NASDAQ:ADUS), World Acceptance Corp. (NASDAQ:WRLD), and Pitney Bowes Inc. (NYSE:PBI). All of these stocks’ market caps are similar to WW’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $114 million. That figure was $303 million in WW’s case. Pitney Bowes Inc. (NYSE:PBI) is the most popular stock in this table. On the other hand World Acceptance Corp. (NASDAQ:WRLD) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks WW International, Inc. (NASDAQ:WW) is more popular among hedge funds. Our overall hedge fund sentiment score for WW is 71.5. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. Unfortunately WW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WW were disappointed as the stock returned -5.4% since the end of the third quarter (through 12/9) 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 since 2019.

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

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