Is WU Stock A Buy or Sell?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards The Western Union Company (NYSE:WU).

Is WU stock a buy? The Western Union Company (NYSE:WU) investors should be aware of a decrease in hedge fund interest in recent months. The Western Union Company (NYSE:WU) was in 29 hedge funds’ portfolios at the end of December. The all time high for this statistic is 36. Our calculations also showed that WU isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

David E. Shaw of D.E. Shaw

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 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 we’re going to review the key hedge fund action surrounding The Western Union Company (NYSE:WU).

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

At the end of the fourth quarter, a total of 29 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from one quarter earlier. On the other hand, there were a total of 29 hedge funds with a bullish position in WU a year ago. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

Among these funds, Citadel Investment Group held the most valuable stake in The Western Union Company (NYSE:WU), which was worth $157.8 million at the end of the fourth quarter. On the second spot was D E Shaw which amassed $81.1 million worth of shares. Millennium Management, International Value Advisers, and Arrowstreet Capital 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 International Value Advisers allocated the biggest weight to The Western Union Company (NYSE:WU), around 8.56% of its 13F portfolio. Full18 Capital is also relatively very bullish on the stock, dishing out 0.65 percent of its 13F equity portfolio to WU.

Due to the fact that The Western Union Company (NYSE:WU) has faced a decline in interest from the smart money, it’s easy to see that there exists a select few hedge funds who were dropping their positions entirely in the fourth quarter. At the top of the heap, Thomas E. Claugus’s GMT Capital cut the biggest position of all the hedgies monitored by Insider Monkey, valued at close to $15.2 million in stock. David MacKnight’s fund, One Fin Capital Management, also dumped its stock, about $9.4 million worth. These moves are important to note, as aggregate hedge fund interest fell by 7 funds in the fourth quarter.

Let’s also examine hedge fund activity in other stocks similar to The Western Union Company (NYSE:WU). We will take a look at Flex Ltd. (NASDAQ:FLEX), Newell Brands Inc. (NASDAQ:NWL), Pinnacle West Capital Corporation (NYSE:PNW), WEX Inc (NYSE:WEX), Store Capital Corporation (NYSE:STOR), Neurocrine Biosciences, Inc. (NASDAQ:NBIX), and Ascendis Pharma A/S (NASDAQ:ASND). All of these stocks’ market caps are closest to WU’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 27.3 hedge funds with bullish positions and the average amount invested in these stocks was $1184 million. That figure was $491 million in WU’s case. Flex Ltd. (NASDAQ:FLEX) is the most popular stock in this table. On the other hand Store Capital Corporation (NYSE:STOR) is the least popular one with only 12 bullish hedge fund positions. The Western Union Company (NYSE:WU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WU is 48.7. 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 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 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on WU as the stock returned 15.5% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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