Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Wabash National Corporation (NYSE:WNC).
Wabash National Corporation (NYSE:WNC) was in 18 hedge funds’ portfolios at the end of the third quarter of 2016. WNC has seen a decrease in hedge fund sentiment in recent months. There were 19 hedge funds in our database with WNC holdings at the end of the previous 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 Nevsun Resources (USA) (NYSEMKT:NSU), GMS Inc (NYSE:GMS), and Penn West Petroleum Ltd (USA) (NYSE:PWE) to gather more data points.
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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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Hedge fund activity in Wabash National Corporation (NYSE:WNC)
Heading into the fourth quarter of 2016, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 5% from the second quarter of 2016. By comparison, 17 hedge funds held shares or bullish call options in WNC heading into this year. So, let’s examine 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, Gotham Asset Management, led by Joel Greenblatt, holds the most valuable position in Wabash National Corporation (NYSE:WNC). Gotham Asset Management has a $15.2 million position in the stock. Coming in second is Mike Masters of Masters Capital Management, with a $14.2 million position. Some other members of the smart money with similar optimism consist of Cliff Asness’ AQR Capital Management, Jim Simons’ Renaissance Technologies, one of the largest hedge funds in the world, and Israel Englander’s Millennium 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-microcap stocks.
Seeing as Wabash National Corporation (NYSE:WNC) has encountered bearish sentiment from the smart money, we can see that there exists a select few fund managers that elected to cut their entire stakes heading into Q4. It’s worth mentioning that Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest position of the “upper crust” of funds studied by Insider Monkey, comprising close to $1.7 million in stock. David Costen Haley’s fund, HBK Investments, also sold off its stock, about $0.7 million worth.
Let’s now review hedge fund activity in other stocks similar to Wabash National Corporation (NYSE:WNC). These stocks are Nevsun Resources (USA) (NYSEMKT:NSU), GMS Inc (NYSE:GMS), Penn West Petroleum Ltd (USA) (NYSE:PWE), and General American Investors Co. Inc. (NYSE:GAM). This group of stocks’ market values are similar to WNC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NSU | 12 | 61168 | 0 |
| GMS | 10 | 37828 | -2 |
| PWE | 13 | 48595 | 1 |
| GAM | 4 | 15051 | 4 |
As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $41 million. That figure was $58 million in WNC’s case. Penn West Petroleum Ltd (USA) (NYSE:PWE) is the most popular stock in this table. On the other hand General American Investors Co. Inc. (NYSE:GAM) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Wabash National Corporation (NYSE:WNC) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
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