The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Webster Financial Corporation (NYSE:WBS) based on those filings.
Is Webster Financial Corporation (NYSE:WBS) undervalued? The best stock pickers are becoming less confident. The number of bullish hedge fund bets were trimmed by 2 in recent months. Our calculations also showed that WBS isn’t among the 30 most popular stocks among hedge funds. WBS was in 26 hedge funds’ portfolios at the end of December. There were 28 hedge funds in our database with WBS holdings at the end of the previous quarter.
In today’s marketplace there are many tools market participants can use to analyze publicly traded companies. A duo of the most under-the-radar tools are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can outpace the broader indices by a superb amount (see the details here).
Let’s view the key hedge fund action regarding Webster Financial Corporation (NYSE:WBS).
What have hedge funds been doing with Webster Financial Corporation (NYSE:WBS)?
At the end of the fourth quarter, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WBS over the last 14 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pzena Investment Management was the largest shareholder of Webster Financial Corporation (NYSE:WBS), with a stake worth $56.7 million reported as of the end of September. Trailing Pzena Investment Management was Nitorum Capital, which amassed a stake valued at $46.6 million. Polaris Capital Management, Fisher Asset Management, and Balyasny Asset Management were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Webster Financial Corporation (NYSE:WBS) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there were a few money managers who were dropping their entire stakes last quarter. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest position of all the hedgies watched by Insider Monkey, totaling an estimated $3.6 million in stock, and Sander Gerber’s Hudson Bay Capital Management was right behind this move, as the fund dumped about $3.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Webster Financial Corporation (NYSE:WBS) but similarly valued. We will take a look at Chemed Corporation (NYSE:CHE), Teradata Corporation (NYSE:TDC), Catalent Inc (NYSE:CTLT), and Fluor Corporation (NYSE:FLR). This group of stocks’ market caps are closest to WBS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHE | 24 | 389548 | 1 |
| TDC | 21 | 211609 | -2 |
| CTLT | 19 | 235857 | -4 |
| FLR | 20 | 223293 | -3 |
| Average | 21 | 265077 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $265 million. That figure was $316 million in WBS’s case. Chemed Corporation (NYSE:CHE) is the most popular stock in this table. On the other hand Catalent Inc (NYSE:CTLT) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Webster Financial Corporation (NYSE:WBS) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately WBS wasn’t nearly as popular as these 15 stock and hedge funds that were betting on WBS were disappointed as the stock returned 5.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
