Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about World Acceptance Corporation (NASDAQ:WRLD).
Is World Acceptance Corporation (NASDAQ:WRLD) a first-rate investment now? Hedge funds are becoming more confident. The number of bullish hedge fund positions increased by 3 lately. Our calculations also showed that WRLD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). WRLD was in 14 hedge funds’ portfolios at the end of September. There were 11 hedge funds in our database with WRLD positions at the end of the previous quarter.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a gander at the recent hedge fund action regarding World Acceptance Corporation (NASDAQ:WRLD).
What does smart money think about World Acceptance Corporation (NASDAQ:WRLD)?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 27% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WRLD over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in World Acceptance Corporation (NASDAQ:WRLD) was held by CAS Investment Partners, which reported holding $60.5 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $36.2 million position. Other investors bullish on the company included Nantahala Capital Management, General Equity Partners, and Goodnow Investment Group. In terms of the portfolio weights assigned to each position CAS Investment Partners allocated the biggest weight to World Acceptance Corporation (NASDAQ:WRLD), around 13.36% of its 13F portfolio. General Equity Partners is also relatively very bullish on the stock, setting aside 10.55 percent of its 13F equity portfolio to WRLD.
As one would reasonably expect, some big names have jumped into World Acceptance Corporation (NASDAQ:WRLD) headfirst. General Equity Partners, managed by Andrew Bellas, created the most valuable position in World Acceptance Corporation (NASDAQ:WRLD). General Equity Partners had $13.2 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $0.8 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Dmitry Balyasny’s Balyasny Asset Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as World Acceptance Corporation (NASDAQ:WRLD) but similarly valued. We will take a look at Health Catalyst, Inc (NASDAQ:HCAT), Ballard Power Systems Inc. (NASDAQ:BLDP), LendingClub Corporation (NYSE:LC), and Central European Media Enterprises Ltd. (NASDAQ:CETV). This group of stocks’ market valuations resemble WRLD’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HCAT | 13 | 45286 | 13 |
| BLDP | 6 | 3386 | 2 |
| LC | 8 | 3937 | -2 |
| CETV | 10 | 13280 | 2 |
| Average | 9.25 | 16472 | 3.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $16 million. That figure was $167 million in WRLD’s case. Health Catalyst, Inc (NASDAQ:HCAT) is the most popular stock in this table. On the other hand Ballard Power Systems Inc. (NASDAQ:BLDP) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks World Acceptance Corporation (NASDAQ:WRLD) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately WRLD wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WRLD were disappointed as the stock returned -25.5% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
