The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the first quarter, which unveil their equity positions as of March 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards WEX Inc (NYSE:WEX).
WEX Inc (NYSE:WEX) investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. Our calculations also showed that WEX isn’t among the 30 most popular stocks among hedge funds.
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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Paul Reeder of PAR Capital
Let’s go over the key hedge fund action encompassing WEX Inc (NYSE:WEX).
How have hedgies been trading WEX Inc (NYSE:WEX)?
Heading into the second quarter of 2019, a total of 30 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WEX over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, PAR Capital Management held the most valuable stake in WEX Inc (NYSE:WEX), which was worth $139.2 million at the end of the first quarter. On the second spot was Echo Street Capital Management which amassed $109.4 million worth of shares. Moreover, Citadel Investment Group, Columbus Circle Investors, and Daruma Asset Management were also bullish on WEX Inc (NYSE:WEX), allocating a large percentage of their portfolios to this stock.
Due to the fact that WEX Inc (NYSE:WEX) has experienced falling interest from the smart money, it’s easy to see that there was a specific group of funds that decided to sell off their positions entirely in the third quarter. It’s worth mentioning that David Costen Haley’s HBK Investments dumped the largest investment of the “upper crust” of funds tracked by Insider Monkey, worth about $2.1 million in stock. Joel Greenblatt’s fund, Gotham Asset Management, also sold off its stock, about $2.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as WEX Inc (NYSE:WEX) but similarly valued. These stocks are Gaming and Leisure Properties Inc (NASDAQ:GLPI), Graco Inc. (NYSE:GGG), Black Knight, Inc. (NYSE:BKI), and Jazz Pharmaceuticals Public Limited Company (NASDAQ:JAZZ). This group of stocks’ market valuations are closest to WEX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GLPI | 27 | 945964 | 0 |
| GGG | 18 | 180514 | 0 |
| BKI | 40 | 991316 | 4 |
| JAZZ | 27 | 772683 | -4 |
| Average | 28 | 722619 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $723 million. That figure was $547 million in WEX’s case. Black Knight, Inc. (NYSE:BKI) is the most popular stock in this table. On the other hand Graco Inc. (NYSE:GGG) is the least popular one with only 18 bullish hedge fund positions. WEX Inc (NYSE:WEX) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Hedge funds were also right about betting on WEX, though not to the same extent, as the stock returned 0.2% during the same time frame and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
