Is WY A Good Stock To Buy Now?

With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Weyerhaeuser Co. (NYSE:WY).

Is WY a good stock to buy now? Weyerhaeuser Co. (NYSE:WY) shareholders have witnessed an increase in hedge fund interest recently. Weyerhaeuser Co. (NYSE:WY) was in 41 hedge funds’ portfolios at the end of September. The all time high for this statistic is 37. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 33 hedge funds in our database with WY holdings at the end of June. Our calculations also showed that WY 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).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To most investors, hedge funds are perceived as unimportant, outdated financial vehicles of yesteryear. While there are greater than 8000 funds in operation today, Our researchers choose to focus on the top tier of this group, around 850 funds. It is estimated that this group of investors manage the majority of the hedge fund industry’s total capital, and by tailing their first-class stock picks, Insider Monkey has uncovered a few investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per 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 .

Ric Dillon of Diamond Hill Capital

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. Now let’s view the fresh hedge fund action regarding Weyerhaeuser Co. (NYSE:WY).

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

At third quarter’s end, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 24% from the previous quarter. On the other hand, there were a total of 30 hedge funds with a bullish position in WY a year ago. With hedge funds’ capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

The largest stake in Weyerhaeuser Co. (NYSE:WY) was held by CSat Investment Advisory, which reported holding $390.9 million worth of stock at the end of September. It was followed by Diamond Hill Capital with a $135.4 million position. Other investors bullish on the company included Citadel Investment Group, Renaissance Technologies, and Third Avenue Management. In terms of the portfolio weights assigned to each position CSat Investment Advisory allocated the biggest weight to Weyerhaeuser Co. (NYSE:WY), around 34.76% of its 13F portfolio. Third Avenue Management is also relatively very bullish on the stock, earmarking 6.69 percent of its 13F equity portfolio to WY.

Consequently, key hedge funds have jumped into Weyerhaeuser Co. (NYSE:WY) headfirst. Diamond Hill Capital, managed by Ric Dillon, established the most outsized position in Weyerhaeuser Co. (NYSE:WY). Diamond Hill Capital had $135.4 million invested in the company at the end of the quarter. Kenneth Tropin’s Graham Capital Management also made a $11.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Noam Gottesman’s GLG Partners, Eduardo Abush’s Waterfront Capital Partners, and Murray Stahl’s Horizon Asset Management.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Weyerhaeuser Co. (NYSE:WY) but similarly valued. These stocks are Old Dominion Freight Line (NASDAQ:ODFL), TD Ameritrade Holding Corp. (NYSE:AMTD), AvalonBay Communities Inc (NYSE:AVB), Realty Income Corporation (NYSE:O), EOG Resources Inc (NYSE:EOG), DraftKings Inc. (NASDAQ:DKNG), and PPL Corporation (NYSE:PPL). This group of stocks’ market caps match WY’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $764 million. That figure was $477 million in WY’s case. Old Dominion Freight Line (NASDAQ:ODFL) is the most popular stock in this table. On the other hand PPL Corporation (NYSE:PPL) is the least popular one with only 21 bullish hedge fund positions. Weyerhaeuser Co. (NYSE:WY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WY is 78.5. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on WY as the stock returned 14.1% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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