IS Weyerhaeuser (WY) Stock A Buy or Sell?

Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks initially suffered the most but many of these stocks delivered strong returns since November and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment towards Weyerhaeuser Co. (NYSE:WY) changed recently.

Is WY stock a buy or sell? Weyerhaeuser Co. (NYSE:WY) shareholders have witnessed a decrease in activity from the world’s largest hedge funds recently. Weyerhaeuser Co. (NYSE:WY) was in 40 hedge funds’ portfolios at the end of December. The all time high for this statistic is 41. Our calculations also showed that WY isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

At the moment there are a lot of signals shareholders employ to evaluate stocks. A pair of the less utilized signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can trounce the market by a solid margin (see the details here).

Martin Whitman of Third Avenue Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to check out the fresh hedge fund action regarding Weyerhaeuser Co. (NYSE:WY).

Do Hedge Funds Think WY Is A Good Stock To Buy Now?

At Q4’s end, a total of 40 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from the previous quarter. By comparison, 30 hedge funds held shares or bullish call options in WY a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Diamond Hill Capital was the largest shareholder of Weyerhaeuser Co. (NYSE:WY), with a stake worth $220.3 million reported as of the end of December. Trailing Diamond Hill Capital was Renaissance Technologies, which amassed a stake valued at $64.9 million. Millennium Management, Third Avenue Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Weyerhaeuser Co. (NYSE:WY), around 6.29% of its 13F portfolio. Sandbar Asset Management is also relatively very bullish on the stock, dishing out 2.39 percent of its 13F equity portfolio to WY.

Due to the fact that Weyerhaeuser Co. (NYSE:WY) has witnessed bearish sentiment from the aggregate hedge fund industry, logic holds that there were a few hedge funds that decided to sell off their full holdings in the fourth quarter. At the top of the heap, Alexander Mitchell’s Scopus Asset Management dropped the biggest investment of all the hedgies watched by Insider Monkey, worth an estimated $19.3 million in stock, and Eduardo Abush’s Waterfront Capital Partners was right behind this move, as the fund sold off about $4.3 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 1 funds in the fourth quarter.

Let’s go over hedge fund activity in other stocks similar to Weyerhaeuser Co. (NYSE:WY). We will take a look at ZTO Express (Cayman) Inc. (NYSE:ZTO), PG&E Corporation (NYSE:PCG), Verisign, Inc. (NASDAQ:VRSN), Keysight Technologies Inc (NYSE:KEYS), ArcelorMittal (NYSE:MT), Coupa Software Incorporated (NASDAQ:COUP), and Yandex NV (NASDAQ:YNDX). This group of stocks’ market values are similar to WY’s market value.

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As you can see these stocks had an average of 38.7 hedge funds with bullish positions and the average amount invested in these stocks was $2907 million. That figure was $614 million in WY’s case. PG&E Corporation (NYSE:PCG) is the most popular stock in this table. On the other hand ZTO Express (Cayman) Inc. (NYSE:ZTO) is the least popular one with only 17 bullish hedge fund positions. Weyerhaeuser Co. (NYSE:WY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WY is 56.7. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and beat the market again by 0.8 percentage points. Unfortunately WY wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on WY were disappointed as the stock returned 1.6% since the end of December (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

Disclosure: None. This article was originally published at Insider Monkey.