At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 28. In this article, we will use that wealth of knowledge to determine whether or not Watts Water Technologies Inc (NYSE:WTS) makes for a good investment right now.
Hedge fund interest in Watts Water Technologies Inc (NYSE:WTS) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare WTS to other stocks including Amicus Therapeutics, Inc. (NASDAQ:FOLD), Commscope Holding Company Inc (NASDAQ:COMM), and Sensient Technologies Corporation (NYSE:SXT) to get a better sense of its popularity. Our calculations also showed that WTS isn’t among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Today there are plenty of methods stock market investors can use to assess publicly traded companies. A duo of the best methods are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite money managers can outclass the broader indices by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s view the latest hedge fund action surrounding Watts Water Technologies Inc (NYSE:WTS).
How are hedge funds trading Watts Water Technologies Inc (NYSE:WTS)?
At the end of the second quarter, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WTS over the last 16 quarters. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
More specifically, Impax Asset Management was the largest shareholder of Watts Water Technologies Inc (NYSE:WTS), with a stake worth $180.4 million reported as of the end of March. Trailing Impax Asset Management was GAMCO Investors, which amassed a stake valued at $102.6 million. Renaissance Technologies, Millennium Management, and GLG Partners were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Watts Water Technologies Inc (NYSE:WTS) has experienced bearish sentiment from hedge fund managers, it’s safe to say that there lies a certain “tier” of hedge funds who were dropping their entire stakes heading into Q3. At the top of the heap, Paul Tudor Jones’s Tudor Investment Corp said goodbye to the largest investment of the “upper crust” of funds watched by Insider Monkey, valued at close to $0.5 million in stock. Andrew Feldstein and Stephen Siderow’s fund, Blue Mountain Capital, also cut its stock, about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to Watts Water Technologies Inc (NYSE:WTS). These stocks are Amicus Therapeutics, Inc. (NASDAQ:FOLD), Commscope Holding Company Inc (NASDAQ:COMM), Sensient Technologies Corporation (NYSE:SXT), and Cosan Limited (NYSE:CZZ). This group of stocks’ market caps are similar to WTS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FOLD | 29 | 1059406 | -1 |
| COMM | 20 | 811446 | -3 |
| SXT | 12 | 52368 | 4 |
| CZZ | 15 | 174422 | -1 |
| Average | 19 | 524411 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $524 million. That figure was $337 million in WTS’s case. Amicus Therapeutics, Inc. (NASDAQ:FOLD) is the most popular stock in this table. On the other hand Sensient Technologies Corporation (NYSE:SXT) is the least popular one with only 12 bullish hedge fund positions. Watts Water Technologies Inc (NYSE:WTS) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately WTS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WTS investors were disappointed as the stock returned 0.8% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.
