With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Waters Corporation (NYSE:WAT).
Is Waters Corporation (NYSE:WAT) worth your attention right now? The best stock pickers are taking a pessimistic view. The number of bullish hedge fund bets retreated by 2 lately. WAT was in 28 hedge funds’ portfolios at the end of the third quarter of 2015. There were 30 hedge funds in our database with WAT positions 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 Empresa Nacional de Electricidad (ADR) (NYSE:EOC), Cimarex Energy Co (NYSE:XEC), and Bed Bath & Beyond Inc. (NASDAQ:BBBY) to gather more data points.
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To the average investor, there are dozens of gauges stock traders can use to value publicly traded companies. A pair of the most useful gauges are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the top fund managers can outclass the S&P 500 by a very impressive amount (see the details here).
With all of this in mind, let’s take a look at the recent action surrounding Waters Corporation (NYSE:WAT).
How have hedgies been trading Waters Corporation (NYSE:WAT)?
Heading into Q4, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Generation Investment Management, managed by David Blood and Al Gore, holds the biggest position in Waters Corporation (NYSE:WAT). Generation Investment Management has a $371.5 million position in the stock, comprising 5.4% of its 13F portfolio. Sitting at the No. 2 spot is Brian Bares’ Bares Capital Management, with a $41 million position; 4.1% of its 13F portfolio is allocated to the stock. The remaining members of the smart money that hold long positions include Jim Simons’ Renaissance Technologies, Greg Poole’s Echo Street Capital Management and Robert Joseph Caruso’s Select Equity Group.
Seeing as Waters Corporation (NYSE:WAT) has experienced declining sentiment from hedge fund managers, logic holds that there exists a select few hedgies who sold off their positions entirely in the third quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP sold off the largest position of the “upper crust” of funds tracked by Insider Monkey, valued at close to $5.6 million in stock. Glenn Russell Dubin’s fund, Highbridge Capital Management, also said goodbye to its stock, about $2.5 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest dropped by 2 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Waters Corporation (NYSE:WAT) but similarly valued. We will take a look at Empresa Nacional de Electricidad (ADR) (NYSE:EOC), Cimarex Energy Co (NYSE:XEC), Bed Bath & Beyond Inc. (NASDAQ:BBBY), and Linear Technology Corporation (NASDAQ:LLTC). All of these stocks’ market caps are closest to WAT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EOC | 7 | 12494 | 0 |
| XEC | 40 | 1298274 | 3 |
| BBBY | 33 | 743154 | 1 |
| LLTC | 20 | 1637058 | -9 |
As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $923 million, compared to $621 million in WAT’s case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table. On the other hand Empresa Nacional de Electricidad (ADR) (NYSE:EOC) is the least popular one with only 7 bullish hedge fund positions. Waters Corporation (NYSE:WAT) 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. In this regard XEC might be a better candidate to consider a long position.
