How Weis Markets, Inc. (WMK) Stacks Up Against Its Peers

It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Weis Markets, Inc. (NYSE:WMK).

Hedge fund interest in Weis Markets, Inc. (NYSE:WMK) shares was flat during the third quarter. This is usually a negative indicator. 11 hedge funds that we track owned the stock on September 30, same as on June 30. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Saul Centers Inc (NYSE:BFS), Independent Bank Corp (NASDAQ:INDB), and Myriad Genetics, Inc. (NASDAQ:MYGN) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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What have hedge funds been doing with Weis Markets, Inc. (NYSE:WMK)?

At Q3’s end, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards WMK over the last 5 quarters, which has remained within a fairly narrow range. With hedgies’ capital changing hands, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, led by Chuck Royce, holds the largest position in Weis Markets, Inc. (NYSE:WMK). Royce & Associates has a $71.7 million position in the stock. Sitting at the No. 2 spot is Renaissance Technologies, one of the biggest hedge funds in the world, holding a $31.2 million position. Remaining professional money managers that are bullish comprise Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Mario Gabelli’s GAMCO Investors, and Cliff Asness’ AQR Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds, which is based on the performance of their 13F long positions in non-micro-cap stocks.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions either. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s check out hedge fund activity in other stocks similar to Weis Markets, Inc. (NYSE:WMK). These stocks are Saul Centers Inc (NYSE:BFS), Independent Bank Corp (NASDAQ:INDB), Myriad Genetics, Inc. (NASDAQ:MYGN), and SiteOne Landscape Supply Inc (NYSE:SITE). This group of stocks’ market values are closest to WMK’s market value.

As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $123 million in WMK’s case. Myriad Genetics, Inc. (NASDAQ:MYGN) is the most popular stock in this table. On the other hand Saul Centers Inc (NYSE:BFS) is the least popular one with only 3 bullish hedge fund positions. Weis Markets, Inc. (NYSE:WMK) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MYGN might be a better candidate to consider taking a long position in.

Disclosure: None