Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the fourth quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Willis Towers Watson Public Limited Company (NASDAQ:WLTW) based on that data.
Is Willis Towers Watson Public Limited Company (NASDAQ:WLTW) an excellent investment today? The best stock pickers were becoming hopeful. The number of bullish hedge fund positions went up by 7 in recent months. Willis Towers Watson Public Limited Company (NASDAQ:WLTW) was in 58 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 51. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WLTW isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 51 hedge funds in our database with WLTW positions at the end of the third quarter.
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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 124 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
David Abrams of Abrams Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now we’re going to view the fresh hedge fund action regarding Willis Towers Watson Public Limited Company (NASDAQ:WLTW).
Do Hedge Funds Think WLTW Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 58 of the hedge funds tracked by Insider Monkey were long this stock, a change of 14% from the third quarter of 2020. By comparison, 35 hedge funds held shares or bullish call options in WLTW a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Among these funds, Cantillon Capital Management held the most valuable stake in Willis Towers Watson Public Limited Company (NASDAQ:WLTW), which was worth $491.5 million at the end of the fourth quarter. On the second spot was Millennium Management which amassed $293.6 million worth of shares. Abrams Capital Management, Farallon Capital, and Magnetar 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 Hunting Hill Global Capital allocated the biggest weight to Willis Towers Watson Public Limited Company (NASDAQ:WLTW), around 22.6% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, dishing out 8.99 percent of its 13F equity portfolio to WLTW.
There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Willis Towers Watson Public Limited Company (NASDAQ:WLTW) but similarly valued. We will take a look at Mettler-Toledo International Inc. (NYSE:MTD), Sirius XM Holdings Inc (NASDAQ:SIRI), AutoZone, Inc. (NYSE:AZO), Welltower Inc. (NYSE:WELL), Waste Connections, Inc. (NYSE:WCN), Marathon Petroleum Corp (NYSE:MPC), and Zscaler, Inc. (NASDAQ:ZS). This group of stocks’ market caps resemble WLTW’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MTD | 29 | 850200 | -1 |
| SIRI | 32 | 670253 | -5 |
| AZO | 44 | 1445833 | -9 |
| WELL | 26 | 538410 | 1 |
| WCN | 35 | 626810 | 3 |
| MPC | 43 | 1883612 | -13 |
| ZS | 35 | 1208264 | 9 |
| Average | 34.9 | 1031912 | -2.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.9 hedge funds with bullish positions and the average amount invested in these stocks was $1032 million. That figure was $3246 million in WLTW’s case. AutoZone, Inc. (NYSE:AZO) is the most popular stock in this table. On the other hand Welltower Inc. (NYSE:WELL) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is more popular among hedge funds. Our overall hedge fund sentiment score for WLTW is 90. 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 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on WLTW as the stock returned 23.2% since the end of December (through 4/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
