Should You Buy Wolverine World Wide, Inc. (WWW)?

The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S. economic data. It was not entirely clear whether the broader market sell-off made U.S. equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25, 2015 through October 30, 2015. This clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Wolverine World Wide, Inc. (NYSE:WWW) and see how it was affected.

Is Wolverine World Wide, Inc. (NYSE:WWW) a healthy stock for your portfolio? The best stock pickers are taking an optimistic view. The number of bullish hedge fund bets moved up by 2 lately. WWW was in 15 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with WWW positions at the end of the previous quarter. At the end of this article we will also compare WWW to other stocks including WisdomTree Investments, Inc. (NASDAQ:WETF), PNM Resources, Inc. (NYSE:PNM), and Sothebys (NYSE:BID) to get a better sense of its popularity.

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With all of this in mind, let’s take a look at the new action encompassing Wolverine World Wide, Inc. (NYSE:WWW).

How are hedge funds trading Wolverine World Wide, Inc. (NYSE:WWW)?

Heading into Q4, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from the second quarter. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Chuck Royce’s Royce & Associates has the number one position in Wolverine World Wide, Inc. (NYSE:WWW), worth close to $62.4 million, comprising 0.3% of its total 13F portfolio. Sitting at the No. 2 spot is Select Equity Group, managed by Robert Joseph Caruso, which holds a $27.4 million position; 0.3% of its 13F portfolio is allocated to the company. Other peers with similar optimism consist of Jim Simons’ Renaissance Technologies, Joel Greenblatt’s Gotham Asset Management and D E Shaw.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Highbridge Capital Management, managed by Glenn Russell Dubin, initiated the biggest position in Wolverine World Wide, Inc. (NYSE:WWW). Highbridge Capital Management had $2.1 million invested in the company at the end of the quarter. John Overdeck and David Siegel’s Two Sigma Advisors also made a $0.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Tudor Jones’s Tudor Investment Corp, Benjamin A. Smith’s Laurion Capital Management, and Mike Vranos’s Ellington.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Wolverine World Wide, Inc. (NYSE:WWW) but similarly valued. These stocks are WisdomTree Investments, Inc. (NASDAQ:WETF), PNM Resources, Inc. (NYSE:PNM), Sothebys (NYSE:BID), and Brandywine Realty Trust (NYSE:BDN). This group of stocks’ market values are closest to WWW’s market value.

As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $328 million. That figure was $134 million in WWW’s case. Sothebys (NYSE:BID) is the most popular stock in this table. On the other hand PNM Resources, Inc. (NYSE:PNM) is the least popular one with only 13 bullish hedge fund positions. Wolverine World Wide, Inc. (NYSE:WWW) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BID might be a better candidate to consider a long position.