Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. 63% of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell by 50% and 26% respectively during the same time period, hedge funds’ best picks outperform the market on average. In the following paragraphs, we find out what these billionaire investors and hedge funds think of WestRock Co (NYSE:WRK).
WestRock Co (NYSE:WRK) has seen a major increase in activity from the world’s largest hedge funds recently, with 41 of them adding the stock to their portfolios during the quarter. At the end of this article we will also compare WestRock Co to other stocks including Ingersoll-Rand PLC (NYSE:IR), Parker-Hannifin Corporation (NYSE:PH), and Mohawk Industries, Inc. (NYSE:MHK) to get a better sense of its popularity.
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In the 21st century investor’s toolkit there are several tools shareholders use to assess publicly traded companies. A couple of the less utilized tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top investment managers can trounce the broader indices by a superb margin (see the details here).
Keeping this in mind, we’re going to view the fresh action encompassing WestRock Co (NYSE:WRK).
What have hedge funds been doing with WestRock Co (NYSE:WRK)?
Heading into Q4, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, all but one of which is a new shareholder. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were upping their stakes meaningfully.
Of the funds tracked by Insider Monkey, Jeffrey Smith’s Starboard Value LP has the most valuable position in WestRock Co (NYSE:WRK), worth close to $316.3 million, accounting for 7.1% of its total 13F portfolio. Sitting in the #2 spot is Larry Robbins of Glenview Capital, with a $225.9 million position; the fund has 1.1% of its 13F portfolio invested in the stock. Some other members of the smart money that hold long positions encompass D E Shaw, Curtis Macnguyen’s Ivory Capital (Investment Mgmt), and Anthony Bozza’s Lakewood Capital Management, all of which were new positions.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as WestRock Co (NYSE:WRK) but similarly valued. These stocks are Ingersoll-Rand PLC (NYSE:IR), Parker-Hannifin Corporation (NYSE:PH), Mohawk Industries, Inc. (NYSE:MHK), and Invesco Ltd. (NYSE:IVZ). This group of stocks’ market valuations resemble WestRock Co’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IR | 42 | 1439823 | 5 |
| PH | 25 | 847557 | 5 |
| MHK | 64 | 2866628 | 5 |
| IVZ | 38 | 691373 | 0 |
As you can see these stocks had an average of 42.25 hedge funds with bullish positions and the average amount invested in these stocks was $1.46 billion. That figure was $1.47 billion in WestRock Co’s case. Mohawk Industries, Inc. (NYSE:MHK) is the most popular stock in this table. On the other hand Parker-Hannifin Corporation (NYSE:PH) is the least popular one with only 25 bullish hedge fund positions. WestRock Co (NYSE:WRK) is not the least popular stock in this group but hedge fund interest is still below average. However, given the huge influx of smart money into the stock during Q3, it may be worth investigating further why so many top investors like Jeffrey Smith are confident in this stock right now.