Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is John Wiley & Sons Inc (NYSE:JW.A) ready to rally soon? The stock of the publishing company lost 15% in the first nine months of the year, which led to the best stock pickers reducing their bets on the stock. The number of long hedge fund bets decreased by 7 between July and September. At the end of this article we will also compare JW to other stocks, including Columbia Property Trust Inc (NYSE:CXP), Targa Resources Corp (NYSE:TRGP), and Mentor Graphics Corp (NASDAQ:MENT) to get a better sense of its popularity.
Follow John Wiley & Sons Inc. (NYSE:WLY, WLYB)
Follow John Wiley & Sons Inc. (NYSE:WLY, WLYB)
To most investors, hedge funds are seen as slow, old financial tools of the past. While there are more than 8000 funds trading at present, We hone in on the aristocrats of this group, approximately 700 funds. These hedge fund managers oversee bulk of all hedge funds’ total capital, and by keeping track of their matchless investments, Insider Monkey has come up with numerous investment strategies that have historically defeated the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points per annum for a decade in their back tests.
With all of this in mind, let’s take a look at the key action encompassing John Wiley & Sons Inc (NYSE:JW.A).
Hedge fund activity in John Wiley & Sons Inc (NYSE:JW.A)
At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, down by 32% over the quarter. With hedge funds’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the most valuable position in John Wiley & Sons Inc (NYSE:JW.A), worth close to $61.1 million, accounting for 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, which holds a $13.1 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism encompass Cliff Asness’ AQR Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors, and Ken Griffin’s Citadel Investment Group.
Seeing as John Wiley & Sons Inc (NYSE:JW.A) has faced falling interest from hedge fund managers, logic holds that there lies a certain “tier” of hedgies who were dropping their entire stakes in the third quarter. It’s worth mentioning that Glenn Russell Dubin’s Highbridge Capital Management dumped the largest stake of all the hedgies followed by Insider Monkey, valued at an estimated $6.9 million in stock. Neil Chriss’ fund, Hutchin Hill Capital, also cut its stock, about $2.2 million worth.
Let’s now take a look at hedge fund activity in other stocks similar to John Wiley & Sons Inc (NYSE:JW.A). These stocks are Columbia Property Trust Inc (NYSE:CXP), Targa Resources Corp (NYSE:TRGP), Mentor Graphics Corp (NASDAQ:MENT), and Progressive Waste Solutions Ltd (USA) (NYSE:BIN). This group of stocks’ market values resemble JW.A’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CXP | 9 | 237795 | -3 |
| TRGP | 22 | 265682 | 0 |
| MENT | 21 | 591591 | -2 |
| BIN | 21 | 277354 | 0 |
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $343 million. That figure was $113 million in JW.A’s case. Targa Resources Corp (NYSE:TRGP) is the most popular stock in this table. On the other hand Columbia Property Trust Inc (NYSE:CXP) is the least popular one with only 9 bullish hedge fund positions. John Wiley & Sons Inc (NYSE:JW.A) 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 TRGP might be a better candidate to consider a long position.
