Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.
Is Wabash National Corporation (NYSE:WNC) undervalued? The smart money is taking an optimistic view. The number of bullish hedge fund bets went up by 7 recently. Our calculations also showed that WNC isn’t among the 30 most popular stocks among hedge funds. WNC was in 20 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 13 hedge funds in our database with WNC positions at the end of the previous quarter.
In the financial world there are dozens of tools shareholders put to use to value their holdings. Two of the best tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can outclass the S&P 500 by a solid amount (see the details here).
We’re going to take a peek at the new hedge fund action surrounding Wabash National Corporation (NYSE:WNC).
Hedge fund activity in Wabash National Corporation (NYSE:WNC)
At the end of the fourth quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 54% from one quarter earlier. By comparison, 14 hedge funds held shares or bullish call options in WNC a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Wabash National Corporation (NYSE:WNC) was held by Royce & Associates, which reported holding $36.6 million worth of stock at the end of December. It was followed by Millennium Management with a $10.8 million position. Other investors bullish on the company included Winton Capital Management, Renaissance Technologies, and Citadel Investment Group.
As aggregate interest increased, key money managers were breaking ground themselves. Winton Capital Management, managed by David Harding, assembled the biggest position in Wabash National Corporation (NYSE:WNC). Winton Capital Management had $6.8 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $0.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Paul Tudor Jones’s Tudor Investment Corp, and Benjamin A. Smith’s Laurion Capital Management.
Let’s go over hedge fund activity in other stocks similar to Wabash National Corporation (NYSE:WNC). These stocks are Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX), Resolute Forest Products Inc (NYSE:RFP), Multi-Color Corporation (NASDAQ:LABL), and MTS Systems Corporation (NASDAQ:MTSC). This group of stocks’ market caps match WNC’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRNX | 7 | 320479 | -2 |
| RFP | 27 | 318569 | 5 |
| LABL | 10 | 17888 | 5 |
| MTSC | 12 | 104204 | 0 |
| Average | 14 | 190285 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $190 million. That figure was $71 million in WNC’s case. Resolute Forest Products Inc (NYSE:RFP) is the most popular stock in this table. On the other hand Crinetics Pharmaceuticals, Inc. (NASDAQ:CRNX) is the least popular one with only 7 bullish hedge fund positions. Wabash National Corporation (NYSE:WNC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately WNC wasn’t nearly as popular as these 15 stock and hedge funds that were betting on WNC were disappointed as the stock returned 16.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
