A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 28, so let’s proceed with the discussion of the hedge fund sentiment on Wesco Aircraft Holdings Inc (NYSE:WAIR).
Is Wesco Aircraft Holdings Inc (NYSE:WAIR) going to take off soon? The smart money is becoming less hopeful. The number of bullish hedge fund positions shrunk by 1 lately. Our calculations also showed that WAIR isn’t among the 30 most popular stocks among hedge funds (see the video below). WAIR was in 21 hedge funds’ portfolios at the end of the second quarter of 2019. There were 22 hedge funds in our database with WAIR holdings at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, 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 look at the recent hedge fund action encompassing Wesco Aircraft Holdings Inc (NYSE:WAIR).
What does smart money think about Wesco Aircraft Holdings Inc (NYSE:WAIR)?
Heading into the third quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. By comparison, 12 hedge funds held shares or bullish call options in WAIR a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
The largest stake in Wesco Aircraft Holdings Inc (NYSE:WAIR) was held by Makaira Partners, which reported holding $120.1 million worth of stock at the end of March. It was followed by Cove Street Capital with a $26.4 million position. Other investors bullish on the company included Royce & Associates, Wallace R. Weitz & Co., and Pzena Investment Management.
Judging by the fact that Wesco Aircraft Holdings Inc (NYSE:WAIR) has faced declining sentiment from the smart money, it’s safe to say that there was a specific group of hedgies that slashed their positions entirely in the second quarter. Intriguingly, Minhua Zhang’s Weld Capital Management sold off the largest stake of all the hedgies followed by Insider Monkey, valued at about $0.2 million in stock. Jeffrey Talpins’s fund, Element Capital Management, also sold off its stock, about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 1 funds in the second quarter.
Let’s now review hedge fund activity in other stocks similar to Wesco Aircraft Holdings Inc (NYSE:WAIR). We will take a look at Lantheus Holdings Inc (NASDAQ:LNTH), ARMOUR Residential REIT, Inc. (NYSE:ARR), Fitbit Inc (NYSE:FIT), and Funko, Inc. (NASDAQ:FNKO). This group of stocks’ market valuations are similar to WAIR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LNTH | 15 | 103780 | -3 |
| ARR | 8 | 66931 | 0 |
| FIT | 13 | 81288 | -5 |
| FNKO | 17 | 97217 | 1 |
| Average | 13.25 | 87304 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $87 million. That figure was $252 million in WAIR’s case. Funko, Inc. (NASDAQ:FNKO) is the most popular stock in this table. On the other hand ARMOUR Residential REIT, Inc. (NYSE:ARR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Wesco Aircraft Holdings Inc (NYSE:WAIR) is more popular among hedge funds. 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. Unfortunately WAIR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WAIR were disappointed as the stock returned -0.8% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
