Is Winnebago Industries, Inc. (WGO) a Good Stock to Invest in?

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards Winnebago Industries, Inc. (NYSE:WGO), and what that likely means for the prospects of the company and its stock.

Is Winnebago Industries, Inc. (NYSE:WGO) ready to rally soon? The best stock pickers seem to be taking a slightly bullish view as the number of bullish hedge fund positions inched up by one between July and September. In this way, there were 15 hedge funds in our database with WGO positions at the end of the third 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 Aimmune Therapeutics Inc (NASDAQ:AIMT), Dime Community Bancshares, Inc. (NASDAQ:DCOM), and Richmont Mines Inc. (USA) (NYSEAMEX:RIC) to gather more data points.

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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Now, we’re going to check out the fresh action regarding Winnebago Industries, Inc. (NYSE:WGO).

How have hedgies been trading Winnebago Industries, Inc. (NYSE:WGO)?

At the end of September, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, up by 8% from the end of the second quarter. The graph below displays the number of hedge funds with bullish position in WGO over the last five quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in Winnebago Industries, Inc. (NYSE:WGO), worth close to $59.3 million, amounting to 0.4% of its total 13F portfolio. Coming in second is Jeffrey Gendell’s  Tontine Asset Management, with a $8.6 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Some other members of the smart money that are bullish include Jim Simons’ Renaissance Technologies, Israel Englander’s Millennium Management, and Mario Gabelli’s GAMCO Investors. We should note that none of these hedge funds are 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.

As aggregate interest increased, some big names have jumped into Winnebago Industries, Inc. (NYSE:WGO) headfirst. Two Sigma Advisors, led by John Overdeck and David Siegel, established the most outsized position in Winnebago Industries, Inc. (NYSE:WGO). Two Sigma Advisors had $1.2 million invested in the company at the end of the quarter. Peter Muller’s PDT Partners also made a $0.9 million investment in the stock during the quarter. The other funds with brand new WGO positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Glenn Russell Dubin’s Highbridge Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Winnebago Industries, Inc. (NYSE:WGO) but similarly valued. These stocks are Aimmune Therapeutics Inc (NASDAQ:AIMT), Dime Community Bancshares, Inc. (NASDAQ:DCOM), Richmont Mines Inc. (USA) (NYSEAMEX:RIC), and Cass Information Systems (NASDAQ:CASS). This group of stocks’ market valuations are similar to WGO’s market valuation.

As you can see these stocks had an average of eight funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $89 million in WGO’s case. Aimmune Therapeutics Inc (NASDAQ:AIMT) is the most popular stock in this table. On the other hand Cass Information Systems (NASDAQ:CASS) is the least popular one with only five long hedge fund positions. Compared to these stocks Winnebago Industries, Inc. (NYSE:WGO) 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