Is WST Stock A Buy or Sell?

Is West Pharmaceutical Services Inc. (NYSE:WST) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is WST stock a buy? West Pharmaceutical Services Inc. (NYSE:WST) investors should pay attention to a decrease in hedge fund sentiment of late. West Pharmaceutical Services Inc. (NYSE:WST) was in 34 hedge funds’ portfolios at the end of December. The all time high for this statistic is 41. There were 41 hedge funds in our database with WST holdings at the end of September. Our calculations also showed that WST isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

At the moment there are plenty of metrics shareholders have at their disposal to analyze their holdings. A pair of the less utilized metrics are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can outclass the broader indices by a significant amount (see the details here).

Cliff Asness of AQR Capital Management

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 view the recent hedge fund action regarding West Pharmaceutical Services Inc. (NYSE:WST).

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

At Q4’s end, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WST over the last 22 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Fisher Asset Management, managed by Ken Fisher, holds the largest position in West Pharmaceutical Services Inc. (NYSE:WST). Fisher Asset Management has a $89.8 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $70.5 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other professional money managers that are bullish consist of Barry Dargan’s Intermede Investment Partners, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Intermede Investment Partners allocated the biggest weight to West Pharmaceutical Services Inc. (NYSE:WST), around 2.03% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, earmarking 0.94 percent of its 13F equity portfolio to WST.

Because West Pharmaceutical Services Inc. (NYSE:WST) has witnessed a decline in interest from the smart money, logic holds that there is a sect of funds that elected to cut their entire stakes heading into Q1. At the top of the heap, Benjamin A. Smith’s Laurion Capital Management dumped the largest position of the 750 funds watched by Insider Monkey, totaling about $5 million in stock, and Jinghua Yan’s TwinBeech Capital was right behind this move, as the fund cut about $4.1 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 7 funds heading into Q1.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as West Pharmaceutical Services Inc. (NYSE:WST) but similarly valued. These stocks are United Microelectronics Corp (NYSE:UMC), Zebra Technologies Corporation (NASDAQ:ZBRA), CGI Inc. (NYSE:GIB), Canon Inc. (NYSE:CAJ), Synchrony Financial (NYSE:SYF), SVB Financial Group (NASDAQ:SIVB), and EPAM Systems Inc (NYSE:EPAM). All of these stocks’ market caps are closest to WST’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.9 hedge funds with bullish positions and the average amount invested in these stocks was $725 million. That figure was $456 million in WST’s case. Synchrony Financial (NYSE:SYF) is the most popular stock in this table. On the other hand Canon Inc. (NYSE:CAJ) is the least popular one with only 7 bullish hedge fund positions. West Pharmaceutical Services Inc. (NYSE:WST) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WST is 54.3. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 7.9% in 2021 through April 1st and beat the market again by 0.4 percentage points. Unfortunately WST wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on WST were disappointed as the stock returned 0.6% since the end of December (through 4/1) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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