“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Wanda Sports Group Company Limited (NASDAQ:WSG).
Is Wanda Sports Group Company Limited (NASDAQ:WSG) a superb stock to buy now? Prominent investors are betting on the stock. The number of long hedge fund positions improved by 5 recently. Our calculations also showed that WSG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Louis Bacon Moore of Moore Capital
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s view the fresh hedge fund action encompassing Wanda Sports Group Company Limited (NASDAQ:WSG).
Hedge fund activity in Wanda Sports Group Company Limited (NASDAQ:WSG)
At the end of the third quarter, a total of 5 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5 from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WSG over the last 17 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Wanda Sports Group Company Limited (NASDAQ:WSG) was held by Moore Global Investments, which reported holding $5.7 million worth of stock at the end of September. It was followed by Luminus Management with a $4.9 million position. Other investors bullish on the company included Alyeska Investment Group, Canyon Capital Advisors, and Millennium Management. In terms of the portfolio weights assigned to each position Moore Global Investments allocated the biggest weight to Wanda Sports Group Company Limited (NASDAQ:WSG), around 0.23% of its 13F portfolio. Luminus Management is also relatively very bullish on the stock, setting aside 0.14 percent of its 13F equity portfolio to WSG.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Wanda Sports Group Company Limited (NASDAQ:WSG) headfirst. Moore Global Investments, managed by Louis Bacon, established the largest position in Wanda Sports Group Company Limited (NASDAQ:WSG). Moore Global Investments had $5.7 million invested in the company at the end of the quarter. Jonathan Barrett and Paul Segal’s Luminus Management also initiated a $4.9 million position during the quarter. The other funds with brand new WSG positions are Anand Parekh’s Alyeska Investment Group, Joshua Friedman and Mitchell Julis’s Canyon Capital Advisors, and Israel Englander’s Millennium Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Wanda Sports Group Company Limited (NASDAQ:WSG) but similarly valued. We will take a look at The First Bancshares, Inc. (MS) (NASDAQ:FBMS), Schnitzer Steel Industries, Inc. (NASDAQ:SCHN), Heska Corp (NASDAQ:HSKA), and Axcelis Technologies Inc (NASDAQ:ACLS). This group of stocks’ market caps resemble WSG’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FBMS | 8 | 32584 | 1 |
| SCHN | 11 | 22473 | -1 |
| HSKA | 12 | 51094 | -1 |
| ACLS | 15 | 86778 | 1 |
| Average | 11.5 | 48232 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $48 million. That figure was $13 million in WSG’s case. Axcelis Technologies Inc (NASDAQ:ACLS) is the most popular stock in this table. On the other hand The First Bancshares, Inc. (MS) (NASDAQ:FBMS) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Wanda Sports Group Company Limited (NASDAQ:WSG) is even less popular than FBMS. Hedge funds dodged a bullet by taking a bearish stance towards WSG. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately WSG wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); WSG investors were disappointed as the stock returned -23.5% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.