Is WMB Stock A Buy or Sell?

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards The Williams Companies, Inc. (NYSE:WMB).

Is WMB stock a buy or sell? The Williams Companies, Inc. (NYSE:WMB) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 38 hedge funds’ portfolios at the end of the fourth quarter of 2020. Our calculations also showed that WMB isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). 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 Consolidated Edison, Inc. (NYSE:ED), The Kroger Co. (NYSE:KR), and Fortinet Inc (NASDAQ:FTNT) to gather more data points.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Phillip Gross of Adage Capital

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. With all of this in mind let’s take a glance at the key hedge fund action surrounding The Williams Companies, Inc. (NYSE:WMB).

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

At the end of the fourth quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. By comparison, 40 hedge funds held shares or bullish call options in WMB a year ago. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Among these funds, Southeastern Asset Management held the most valuable stake in The Williams Companies, Inc. (NYSE:WMB), which was worth $182 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $84.6 million worth of shares. Citadel Investment Group, Polaris Capital Management, and Adage Capital Management 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 Heronetta Management allocated the biggest weight to The Williams Companies, Inc. (NYSE:WMB), around 5.86% of its 13F portfolio. Southeastern Asset Management is also relatively very bullish on the stock, earmarking 4.06 percent of its 13F equity portfolio to WMB.

Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.

Let’s now review hedge fund activity in other stocks similar to The Williams Companies, Inc. (NYSE:WMB). These stocks are Consolidated Edison, Inc. (NYSE:ED), The Kroger Co. (NYSE:KR), Fortinet Inc (NASDAQ:FTNT), Cerner Corporation (NASDAQ:CERN), Alexandria Real Estate Equities Inc (NYSE:ARE), BeiGene, Ltd. (NASDAQ:BGNE), and Yum China Holdings, Inc. (NYSE:YUMC). This group of stocks’ market valuations are closest to WMB’s market valuation.

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As you can see these stocks had an average of 29.7 hedge funds with bullish positions and the average amount invested in these stocks was $1572 million. That figure was $563 million in WMB’s case. Yum China Holdings, Inc. (NYSE:YUMC) is the most popular stock in this table. On the other hand Alexandria Real Estate Equities Inc (NYSE:ARE) is the least popular one with only 14 bullish hedge fund positions. The Williams Companies, Inc. (NYSE:WMB) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WMB is 68.6. 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. 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 still beat the market by 0.8 percentage points. Hedge funds were also right about betting on WMB as the stock returned 16.4% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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