The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on September 30th. We at Insider Monkey have made an extensive database of more than 867 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded The Western Union Company (NYSE:WU) based on those filings.
Is WU a good stock to buy? The Western Union Company (NYSE:WU) was in 27 hedge funds’ portfolios at the end of September. The all time high for this statistic is 36. WU shareholders have witnessed a decrease in activity from the world’s largest hedge funds in recent months. There were 31 hedge funds in our database with WU holdings at the end of June. Our calculations also showed that WU isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to go over the new hedge fund action regarding The Western Union Company (NYSE:WU).
Blair Levinsky of Waratah Capital Advisors
Do Hedge Funds Think WU Is A Good Stock To Buy Now?
At Q3’s end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from the second quarter of 2021. By comparison, 36 hedge funds held shares or bullish call options in WU a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, D E Shaw held the most valuable stake in The Western Union Company (NYSE:WU), which was worth $68.8 million at the end of the third quarter. On the second spot was Two Sigma Advisors which amassed $61.3 million worth of shares. AQR Capital Management, GLG Partners, and Millennium Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Sciencast Management allocated the biggest weight to The Western Union Company (NYSE:WU), around 0.44% of its 13F portfolio. Gotham Asset Management is also relatively very bullish on the stock, dishing out 0.27 percent of its 13F equity portfolio to WU.
Due to the fact that The Western Union Company (NYSE:WU) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers that slashed their entire stakes heading into Q4. Interestingly, Renaissance Technologies dropped the largest position of all the hedgies watched by Insider Monkey, worth close to $15.2 million in stock. Jinghua Yan’s fund, TwinBeech Capital, also said goodbye to its stock, about $3.1 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 4 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to The Western Union Company (NYSE:WU). These stocks are Sealed Air Corporation (NYSE:SEE), Under Armour Inc (NYSE:UA), Rexford Industrial Realty Inc (NYSE:REXR), Phillips 66 Partners LP (NYSE:PSXP), The Scotts Miracle-Gro Company (NYSE:SMG), Ralph Lauren Corporation (NYSE:RL), and Pinnacle West Capital Corporation (NYSE:PNW). This group of stocks’ market values resemble WU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SEE | 33 | 626876 | 5 |
| UA | 48 | 1643556 | -3 |
| REXR | 29 | 358442 | 8 |
| PSXP | 5 | 31682 | 0 |
| SMG | 30 | 257473 | -2 |
| RL | 25 | 444724 | -7 |
| PNW | 21 | 175044 | 3 |
| Average | 27.3 | 505400 | 0.6 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $505 million. That figure was $235 million in WU’s case. Under Armour Inc (NYSE:UA) is the most popular stock in this table. On the other hand Phillips 66 Partners LP (NYSE:PSXP) is the least popular one with only 5 bullish hedge fund positions. The Western Union Company (NYSE:WU) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WU is 49.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and surpassed the market again by 5.1 percentage points. Unfortunately WU wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WU investors were disappointed as the stock returned -10.8% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
