After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards WestRock Company (NYSE:WRK).
Is WRK a good stock to buy? WestRock Company (NYSE:WRK) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 32 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that WRK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare WRK to other stocks including Caesars Entertainment Inc. (NASDAQ:CZR), The Toro Company (NYSE:TTC), and American Homes 4 Rent (NYSE:AMH) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most shareholders, hedge funds are perceived as worthless, old financial tools of years past. While there are more than 8000 funds with their doors open today, Our researchers choose to focus on the crème de la crème of this group, approximately 850 funds. These money managers shepherd the majority of the hedge fund industry’s total asset base, and by observing their inimitable investments, Insider Monkey has found several investment strategies that have historically outpaced the S&P 500 index. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
Noam Gottesman of GLG Partners
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 15 best blue chip stocks to buy to pick the best large-cap stocks to buy. 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. Keeping this in mind we’re going to take a glance at the recent hedge fund action encompassing WestRock Company (NYSE:WRK).
Do Hedge Funds Think WRK Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the second quarter of 2020. Below, you can check out the change in hedge fund sentiment towards WRK over the last 21 quarters. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
The largest stake in WestRock Company (NYSE:WRK) was held by Arrowstreet Capital, which reported holding $102.6 million worth of stock at the end of September. It was followed by Impax Asset Management with a $94.9 million position. Other investors bullish on the company included AQR Capital Management, Lakewood Capital Management, and Millennium Management. In terms of the portfolio weights assigned to each position Atlantic Investment Management allocated the biggest weight to WestRock Company (NYSE:WRK), around 16.65% of its 13F portfolio. Proxima Capital Management is also relatively very bullish on the stock, earmarking 4.95 percent of its 13F equity portfolio to WRK.
Because WestRock Company (NYSE:WRK) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there exists a select few fund managers that slashed their full holdings last quarter. It’s worth mentioning that Clint Carlson’s Carlson Capital sold off the largest position of all the hedgies monitored by Insider Monkey, valued at close to $13.2 million in stock, and John Overdeck and David Siegel’s Two Sigma Advisors was right behind this move, as the fund said goodbye to about $6.2 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s now review hedge fund activity in other stocks similar to WestRock Company (NYSE:WRK). These stocks are Caesars Entertainment Inc. (NASDAQ:CZR), The Toro Company (NYSE:TTC), American Homes 4 Rent (NYSE:AMH), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), Watsco Inc (NYSE:WSO), ON Semiconductor Corporation (NASDAQ:ON), and L Brands Inc (NYSE:LB). All of these stocks’ market caps are similar to WRK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CZR | 74 | 1856850 | 24 |
| TTC | 32 | 959661 | 1 |
| AMH | 24 | 294356 | 1 |
| NBIX | 38 | 1005157 | 0 |
| WSO | 29 | 269460 | 8 |
| ON | 29 | 360766 | -3 |
| LB | 45 | 3367576 | 3 |
| Average | 38.7 | 1159118 | 4.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 38.7 hedge funds with bullish positions and the average amount invested in these stocks was $1159 million. That figure was $502 million in WRK’s case. Caesars Entertainment Inc. (NASDAQ:CZR) is the most popular stock in this table. On the other hand American Homes 4 Rent (NYSE:AMH) is the least popular one with only 24 bullish hedge fund positions. WestRock Company (NYSE:WRK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WRK is 35.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and still beat the market by 16.4 percentage points. A small number of hedge funds were also right about betting on WRK as the stock returned 29.1% since the end of the third quarter (through 12/18) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
