Is WESCO International, Inc. (WCC) A Good Stock To Buy?

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: WESCO International, Inc. (NYSE:WCC).

WESCO International, Inc. (NYSE:WCC) was in 20 hedge funds’ portfolios at the end of September. WCC investors should pay attention to a decrease in hedge fund sentiment of late. There were 23 hedge funds in our database with WCC positions at the end of the previous quarter. At the end of this article we will also compare WCC to other stocks including Laredo Petroleum Holdings Inc (NYSE:LPI), BofI Holding, Inc. (NASDAQ:BOFI), and Owens & Minor, Inc. (NYSE:OMI) to get a better sense of its popularity.

Keeping this in mind, let’s go over the recent action regarding WESCO International, Inc. (NYSE:WCC).

How are hedge funds trading WESCO International, Inc. (NYSE:WCC)?

Heading into Q4, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Atlantic Investment Management, managed by Alexander Roepers, holds the biggest position in WESCO International, Inc. (NYSE:WCC). Atlantic Investment Management has an $96.9 million position in the stock, comprising 9.2% of its 13F portfolio. The second largest stake is held by Clint Carlson of Carlson Capital, with an $77.4 million position; 0.9% of its 13F portfolio is allocated to the company. Other professional money managers that are bullish encompass Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, Joel Greenblatt’s Gotham Asset Management and Matthew Lindenbaum’s Basswood Capital.

Since WESCO International, Inc. (NYSE:WCC) has experienced a declination in interest from hedge fund managers, logic holds that there lies a certain “tier” of hedgies that decided to sell off their full holdings last quarter. Intriguingly, Kenney Y. Oh’s SeaStone Capital Management said goodbye to the largest position of the “upper crust” of funds tracked by Insider Monkey, worth an estimated $10.7 million in stock. Andy Redleaf’s fund, Whitebox Advisors, also dropped its stock, about $5.4 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 3 funds last quarter.

Let’s now review hedge fund activity in other stocks similar to WESCO International, Inc. (NYSE:WCC). We will take a look at Laredo Petroleum Holdings Inc (NYSE:LPI), BofI Holding, Inc. (NASDAQ:BOFI), Owens & Minor, Inc. (NYSE:OMI), and Cirrus Logic, Inc. (NASDAQ:CRUS). This group of stocks’ market values are similar to WCC’s market value.

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $185 million. That figure was $351 million in WCC’s case. Cirrus Logic, Inc. (NASDAQ:CRUS) is the most popular stock in this table. On the other hand BofI Holding, Inc. (NASDAQ:BOFI) is the least popular one with only 13 bullish hedge fund positions. WESCO International, Inc. (NYSE:WCC) 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. In this regard CRUS might be a better candidate to consider a long position.