How West Marine, Inc. (WMAR) Stacks Up Against Its Peers

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

West Marine, Inc. (NASDAQ:WMAR) investors should be aware of an increase in hedge fund sentiment recently. WMAR was in 9 hedge funds’ portfolios at the end of the third quarter of 2016. There were 6 hedge funds in our database with WMAR holdings at the end of the second quarter. 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 eHealth, Inc. (NASDAQ:EHTH), MBT Financial Corp. (NASDAQ:MBTF), and Home Bancorp, Inc. (NASDAQ:HBCP) to gather more data points.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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What have hedge funds been doing with West Marine, Inc. (NASDAQ:WMAR)?

At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a boost of 50% from the second quarter of 2016. On the other hand, there were a total of 5 hedge funds with a bullish position in WMAR at the beginning of this year, which has since risen by 80%. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

When looking at the institutional investors followed by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in West Marine, Inc. (NASDAQ:WMAR), worth close to $13 million. Sitting at the No. 2 spot is Robert Joseph Caruso of Select Equity Group, with a $9.2 million position. Other professional money managers with similar optimism encompass John W. Rogers’ Ariel Investments, Renaissance Technologies, one of the largest hedge funds in the world, and Gilchrist Berg’s Water Street Capital. 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.