At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Third Point because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Hedge fund interest in World Wrestling Entertainment, Inc. (NYSE:WWE) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare WWE to other stocks including Alcoa Corporation (NYSE:AA), Gaming and Leisure Properties Inc (NASDAQ:GLPI), and Zendesk Inc (NYSE:ZEN) to get a better sense of its popularity.
To most market participants, hedge funds are perceived as underperforming, old investment tools of the past. While there are greater than 8,000 funds trading at the moment, Our researchers choose to focus on the bigwigs of this group, about 700 funds. Most estimates calculate that this group of people manage the majority of all hedge funds’ total capital, and by shadowing their unrivaled picks, Insider Monkey has unearthed various investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship hedge fund strategy outperformed the S&P 500 index by 6 percentage points a year since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.
Let’s take a gander at the recent hedge fund action regarding World Wrestling Entertainment, Inc. (NYSE:WWE).
Hedge fund activity in World Wrestling Entertainment, Inc. (NYSE:WWE)
At Q3’s end, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, representing no change from the second quarter of 2018. By comparison, 27 hedge funds held shares or bullish call options in WWE heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in World Wrestling Entertainment, Inc. (NYSE:WWE) was held by Renaissance Technologies, which reported holding $320.4 million worth of stock at the end of September. It was followed by Scopus Asset Management with a $125.7 million position. Other investors bullish on the company included Citadel Investment Group, Two Sigma Advisors, and Polar Capital.
Due to the fact that World Wrestling Entertainment, Inc. (NYSE:WWE) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there exists a select few funds who were dropping their entire stakes last quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management dumped the largest stake of all the hedgies monitored by Insider Monkey, valued at an estimated $15.6 million in stock, and David Costen Haley’s HBK Investments was right behind this move, as the fund said goodbye to about $13.1 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as World Wrestling Entertainment, Inc. (NYSE:WWE) but similarly valued. These stocks are Alcoa Corporation (NYSE:AA), Gaming and Leisure Properties Inc (NASDAQ:GLPI), Zendesk Inc (NYSE:ZEN), and Donaldson Company, Inc. (NYSE:DCI). All of these stocks’ market caps are closest to WWE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AA | 38 | 1082615 | 6 |
| GLPI | 33 | 1480136 | 7 |
| ZEN | 44 | 1792157 | 3 |
| DCI | 17 | 175975 | 5 |
| Average | 33 | 1132721 | 5.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 33 hedge funds with bullish positions and the average amount invested in these stocks was $1.13 billion. That figure was $782 million in WWE’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Donaldson Company, Inc. (NYSE:DCI) is the least popular one with only 17 bullish hedge fund positions. World Wrestling Entertainment, Inc. (NYSE:WWE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard ZEN might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
