Reputable billionaire investors such as Nelson Peltz and David Tepper generate exorbitant profits for their wealthy accredited investors (a minimum of $1 million in investable assets would be required to invest in a hedge fund and most successful hedge funds won’t accept your savings unless you commit at least $5 million) by pinpointing winning small-cap stocks. There is little or no publicly-available information at all on some of these small companies, which makes it hard for an individual investor to pin down a winner within the small-cap space. However, hedge funds and other big asset managers can do the due diligence and analysis for you instead, thanks to their highly-skilled research teams and vast resources to conduct an appropriate evaluation process. Looking for potential winners within the small-cap galaxy of stocks? We believe following the smart money is a good starting point.
Weyerhaeuser Co (NYSE:WY) has experienced a decrease in support from the world’s most elite money managers recently. WY was in 27 hedge funds’ portfolios at the end of September. There were 30 hedge funds in our database with WY positions at the end of the previous quarter. At the end of this article we will also compare WY to other stocks including Dollar Tree, Inc. (NASDAQ:DLTR), St. Jude Medical, Inc. (NYSE:STJ), and Discover Financial Services (NYSE:DFS) to get a better sense of its popularity.
Follow Weyerhaeuser Co (NYSE:WY)
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At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, we’re going to view the latest action regarding Weyerhaeuser Co (NYSE:WY).
Hedge fund activity in Weyerhaeuser Co (NYSE:WY)
At the end of the third quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 10% from the second quarter of 2016. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Third Avenue Management, run by Martin Whitman, holds the largest position in Weyerhaeuser Co (NYSE:WY). According to regulatory filings, the fund has a $193.1 million position in the stock, comprising 8.8% of its 13F portfolio. The second most bullish fund manager is Balyasny Asset Management, led by Dmitry Balyasny, holding a $66.1 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism comprise Ken Heebner’s Capital Growth Management, Phill Gross and Robert Atchinson’s Adage Capital Management and Ken Griffin’s Citadel Investment Group.
Judging by the fact that Weyerhaeuser Co (NYSE:WY) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there was a specific group of hedge funds that elected to cut their entire stakes by the end of the third quarter. At the top of the heap, First Eagle Investment Management sold off the largest position of all the hedgies tracked by Insider Monkey, worth close to $1105.7 million in stock, and Andrew Weiss’s Weiss Asset Management was right behind this move, as the fund sold off about $72.1 million worth of WY shares. These moves are important to note, as aggregate hedge fund interest fell by 3 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Weyerhaeuser Co (NYSE:WY) but similarly valued. These stocks are Dollar Tree, Inc. (NASDAQ:DLTR), St. Jude Medical, Inc. (NYSE:STJ), Discover Financial Services (NYSE:DFS), and Corning Incorporated (NYSE:GLW). This group of stocks’ market valuations match WY’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| DLTR | 63 | 3990852 | -1 |
| STJ | 54 | 3180378 | 0 |
| DFS | 38 | 671018 | 2 |
| GLW | 36 | 661996 | 4 |
As you can see these stocks had an average of 48 hedge funds with bullish positions and the average amount invested in these stocks was $2.13 billion. That figure was just $493 million in WY’s case. Dollar Tree, Inc. (NASDAQ:DLTR) is the most popular stock in this table. On the other hand Corning Incorporated (NYSE:GLW) is the least popular one with only 36 bullish hedge fund positions. Compared to these stocks Weyerhaeuser Co (NYSE:WY) is even less popular than GLW. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: none.
