Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the third quarter. Among them, Valeant and Micron ranked among the top 30 picks and both lost around 20%. Citigroup, which was the third most popular stock, lost 10% amid uncertainty regarding the interest rates. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is Web.com Group Inc (NASDAQ:WEB) undervalued? Money managers are becoming hopeful. The number of long hedge fund positions increased by 4 recently. WEB was in 25 hedge funds’ portfolios at the end of September. There were 21 hedge funds in our database with WEB positions at the end of the previous quarter. At the end of this article we will also compare WWWW to other stocks, including Wright Medical Group Inc (NASDAQ:WMGI), istar Inc (NYSE:STAR), and Bankrate Inc (NYSE:RATE) to get a better sense of its popularity.
Follow Web.com Group Inc. (NASDAQ:WEB)
Follow Web.com Group Inc. (NASDAQ:WEB)
In today’s marketplace there are several gauges stock market investors use to appraise their holdings. A duo of the less utilized gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the best investment managers can outperform the S&P 500 by a healthy margin (see the details here).
With all of this in mind, let’s take a peek at the key action surrounding Web.com Group Inc (NASDAQ:WEB).
Hedge fund activity in Web.com Group Inc (NASDAQ:WEB)
Heading into Q4, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Ahmet Okumus’ Okumus Fund Management has the most valuable position in Web.com Group Inc (NASDAQ:WEB), worth close to $152.5 million, amounting to 20% of its total 13F portfolio. Sitting at the No. 2 spot is Craig C. Albert’s Sheffield Asset Management, with a $18.5 million position; the fund has 2.7% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish contain Douglas Dossey and Arthur Young’s Tensile Capital, D. E. Shaw’s D E Shaw and Peter A. Wright’s P.A.W. CAPITAL PARTNERS.
As industry-wide interest jumped, specific money managers were leading the bulls’ herd. Gotham Asset Management, managed by Joel Greenblatt, assembled the most outsized position in Web.com Group Inc (NASDAQ:WEB). Gotham Asset Management had $2.3 million invested in the company at the end of the quarter. Neil Chriss’s Hutchin Hill Capital also initiated a $1.7 million position during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Matthew Tewksbury’s Stevens Capital Management, and Benjamin A. Smith’s Laurion Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Web.com Group Inc (NASDAQ:WEB) but similarly valued. We will take a look at Wright Medical Group Inc (NASDAQ:WMGI), istar Inc (NYSE:STAR), Bankrate Inc (NYSE:RATE), and Franklin Street Properties Corp. (NYSEMKT:FSP). This group of stocks’ market caps match WEB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WMGI | 23 | 460110 | -5 |
| STAR | 19 | 304675 | -7 |
| RATE | 17 | 111516 | 2 |
| FSP | 16 | 79127 | 7 |
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $239 million. That figure was $249 million in WEB’s case. Wright Medical Group Inc (NASDAQ:WMGI) is the most popular stock in this table with 23 funds reporting long positions. On the other hand Franklin Street Properties Corp. (NYSEMKT:FSP) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Web.com Group Inc (NASDAQ:WEB) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.