We at Insider Monkey have gone over 752 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of WSFS Financial Corporation (NASDAQ:WSFS) based on that data.
Is WSFS Financial Corporation (NASDAQ:WSFS) the right investment to pursue these days? The best stock pickers are reducing their bets on the stock. The number of long hedge fund positions fell by 5 recently. Our calculations also showed that WSFS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Richard S. Pzena of Pzena Investment Management
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 new hedge fund action encompassing WSFS Financial Corporation (NASDAQ:WSFS).
What does smart money think about WSFS Financial Corporation (NASDAQ:WSFS)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -33% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in WSFS a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in WSFS Financial Corporation (NASDAQ:WSFS), which was worth $102.9 million at the end of the third quarter. On the second spot was Pzena Investment Management which amassed $29.4 million worth of shares. Royce & Associates, Swift Run Capital Management, and Two Sigma Advisors 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 Swift Run Capital Management allocated the biggest weight to WSFS Financial Corporation (NASDAQ:WSFS), around 3.38% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, setting aside 0.25 percent of its 13F equity portfolio to WSFS.
Due to the fact that WSFS Financial Corporation (NASDAQ:WSFS) has experienced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there was a specific group of fund managers that elected to cut their entire stakes last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising close to $1.9 million in stock. Israel Englander’s fund, Millennium Management, also dumped its stock, about $1.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 5 funds last quarter.
Let’s check out hedge fund activity in other stocks similar to WSFS Financial Corporation (NASDAQ:WSFS). We will take a look at LivePerson, Inc. (NASDAQ:LPSN), Crescent Point Energy Corp (NYSE:CPG), Anixter International Inc. (NYSE:AXE), and Domtar Corporation (NYSE:UFS). This group of stocks’ market valuations are similar to WSFS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| LPSN | 16 | 190487 | -1 |
| CPG | 10 | 64227 | -2 |
| AXE | 18 | 293397 | -2 |
| UFS | 21 | 113431 | 3 |
| Average | 16.25 | 165386 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $169 million in WSFS’s case. Domtar Corporation (NYSE:UFS) is the most popular stock in this table. On the other hand Crescent Point Energy Corp (NYSE:CPG) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks WSFS Financial Corporation (NASDAQ:WSFS) is even less popular than CPG. Hedge funds dodged a bullet by taking a bearish stance towards WSFS. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately WSFS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); WSFS investors were disappointed as the stock returned 1.4% during the fourth quarter (through the end of November) 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 so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
