Is Walgreens Boots Alliance Inc (NASDAQ:WBA) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.
Is Walgreens Boots Alliance Inc (NASDAQ:WBA) an outstanding investment today? Prominent investors were becoming less confident. The number of long hedge fund bets went down by 4 in recent months. Walgreens Boots Alliance Inc (NASDAQ:WBA) was in 37 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 91. Our calculations also showed that WBA 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. Keeping this in mind we’re going to take a glance at the new hedge fund action surrounding Walgreens Boots Alliance Inc (NASDAQ:WBA).
John Rogers of Ariel Investments
Do Hedge Funds Think WBA Is A Good Stock To Buy Now?
At third quarter’s end, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the second quarter of 2021. The graph below displays the number of hedge funds with bullish position in WBA over the last 25 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Walgreens Boots Alliance Inc (NASDAQ:WBA) was held by Camber Capital Management, which reported holding $188.2 million worth of stock at the end of September. It was followed by Antipodes Partners with a $125.5 million position. Other investors bullish on the company included Ariel Investments, Arrowstreet Capital, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Tri Locum Partners allocated the biggest weight to Walgreens Boots Alliance Inc (NASDAQ:WBA), around 6.54% of its 13F portfolio. Tri Locum Partners is also relatively very bullish on the stock, dishing out 5.85 percent of its 13F equity portfolio to WBA.
Due to the fact that Walgreens Boots Alliance Inc (NASDAQ:WBA) has faced bearish sentiment from the aggregate hedge fund industry, it’s easy to see that there were a few hedge funds that elected to cut their full holdings heading into Q4. At the top of the heap, Larry Robbins’s Glenview Capital cut the biggest position of the “upper crust” of funds followed by Insider Monkey, worth an estimated $120.9 million in stock, and Andreas Halvorsen’s Viking Global was right behind this move, as the fund said goodbye to about $114.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 4 funds heading into Q4.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Walgreens Boots Alliance Inc (NASDAQ:WBA) but similarly valued. We will take a look at Pioneer Natural Resources Company (NYSE:PXD), American Electric Power Company, Inc. (NASDAQ:AEP), Prudential Financial Inc (NYSE:PRU), Koninklijke Philips NV (NYSE:PHG), Paychex, Inc. (NASDAQ:PAYX), Electronic Arts Inc. (NASDAQ:EA), and Constellation Brands, Inc. (NYSE:STZ). This group of stocks’ market valuations resemble WBA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PXD | 48 | 958649 | 3 |
| AEP | 36 | 751595 | 7 |
| PRU | 33 | 460021 | 5 |
| PHG | 11 | 79466 | 1 |
| PAYX | 34 | 1115089 | 5 |
| EA | 53 | 1097032 | -3 |
| STZ | 53 | 1719109 | 3 |
| Average | 38.3 | 882994 | 3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.3 hedge funds with bullish positions and the average amount invested in these stocks was $883 million. That figure was $850 million in WBA’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand Koninklijke Philips NV (NYSE:PHG) is the least popular one with only 11 bullish hedge fund positions. Walgreens Boots Alliance Inc (NASDAQ:WBA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WBA is 44.2. 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 percentage points. Unfortunately WBA wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WBA investors were disappointed as the stock returned -3.9% since the end of September (through 11/30) 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.
