Most investors tend to think that hedge funds and other asset managers are worthless, as they cannot beat even simple index fund portfolios. In fact, most people expect hedge funds to compete with and outperform the bull market that we have witnessed over the past few years. However, hedge funds are generally partially hedged and aim at delivering attractive risk-adjusted returns rather than following the ups and downs of equity markets hoping that they will outperform the broader market. Our research shows that hedge funds do have great stock picking skills, so let’s take a glance at the smart money sentiment towards Williams Companies, Inc. (NYSE:WMB) .
Williams Companies, Inc. (NYSE:WMB) investors should pay attention to an increase in hedge fund interest lately. There were 58 hedge funds in our database with WMB holdings 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 Luxottica Group SpA (ADR) (NYSE:LUX), Consolidated Edison, Inc. (NYSE:ED), and TE Connectivity Ltd. (NYSE:TEL) to gather more data points.
Follow Williams Companies Inc. (NYSE:WMB)
Follow Williams Companies Inc. (NYSE:WMB)
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, let’s take a look at the new action surrounding Williams Companies, Inc. (NYSE:WMB).
Hedge fund activity in Williams Companies, Inc. (NYSE:WMB)
At the end of the third quarter, a total of 66 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 14% increase from one quarter earlier. By comparison, 59 hedge funds held shares or bullish call options in WMB heading into this year. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Eric W. Mandelblatt’s Soroban Capital Partners has the most valuable position in Williams Companies, Inc. (NYSE:WMB), worth close to $645.3 million, comprising 3.9% of its total 13F portfolio. On Soroban Capital Partners’ heels is Corvex Capital, led by Keith Meister, which holds a $572.5 million position; 10.7% of its 13F portfolio is allocated to the company. Some other members of the smart money with similar optimism consist of Stephen Mandel’s Lone Pine Capital, Robert Pitts’ Steadfast Capital Management and Jonathon Jacobson’ Highfields Capital Management. We should note that Soroban Capital Partners is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Consequently, key hedge funds were breaking ground themselves. Lone Pine Capital created the biggest position in Williams Companies, Inc. (NYSE:WMB). Lone Pine Capital had $284.2 million invested in the company at the end of the quarter. Dan Loeb’s Third Point also made a $122.9 million investment in the stock during the quarter. The other funds with new positions in the stock are George Soros’ Soros Fund Management, Ryan Pedlow’s Two Creeks Capital Management, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Williams Companies, Inc. (NYSE:WMB) but similarly valued. These stocks are Luxottica Group SpA (ADR) (NYSE:LUX), Consolidated Edison, Inc. (NYSE:ED), TE Connectivity Ltd. (NYSE:TEL), and Discover Financial Services (NYSE:DFS). This group of stocks’ market valuations are similar to WMB’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LUX | 3 | 44058 | -1 |
| ED | 23 | 513331 | 9 |
| TEL | 23 | 869744 | -2 |
| DFS | 38 | 671018 | 2 |
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $525 million. That figure was a whooping $4.58 billion in WMB’s case. Discover Financial Services (NYSE:DFS) is the most popular stock in this table. On the other hand Luxottica Group SpA (ADR) (NYSE:LUX) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Williams Companies, Inc. (NYSE:WMB) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
