Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Wausau Paper Corp. (NYSE:WPP).
Wausau Paper Corp. (NYSE:WPP) has seen an increase in support from the world’s most elite money managers lately. At the end of this article we will also compare WPP to other stocks including Vimicro International Corporation (ADR) (NASDAQ:VIMC), Build-A-Bear Workshop, Inc (NYSE:BBW), and Ecopetrol S.A. (ADR) (NYSE:EC) to get a better sense of its popularity.
Follow Wassau Paper (2016) (NYSE:WPP)
Follow Wassau Paper (2016) (NYSE:WPP)
To the average investor there are numerous methods stock traders employ to evaluate their holdings. Some of the best methods are hedge fund and insider trading indicators. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can outperform the market by a very impressive amount (see the details here).
Keeping this in mind, we’re going to analyze the latest action surrounding Wausau Paper Corp. (NYSE:WPP).
What have hedge funds been doing with Wausau Paper Corp. (NYSE:WPP)?
Heading into Q4, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 70% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Jeffrey Smith’s Starboard Value LP has the biggest position in Wausau Paper Corp. (NYSE:WPP), worth close to $48 million, comprising 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is Stephen V. Raneri of LionEye Capital Management, with a $24.7 million position; the fund has 1% of its 13F portfolio invested in the stock. Remaining peers that hold long positions encompass Rishi Bajaj, Toby Symonds, and Steve Tesoriere’s Altai Capital, Phill Gross and Robert Atchinson’s Adage Capital Management and John Orrico’s Water Island Capital.
As industrywide interest jumped, key money managers were breaking ground themselves. Water Island Capital, managed by John Orrico, established the most valuable position in Wausau Paper Corp. (NYSE:WPP). Water Island Capital had $4.8 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $2.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Jim Simons’s Renaissance Technologies, Ken Gray and Steve Walsh’s Bryn Mawr Capital, and Neil Chriss’s Hutchin Hill Capital.
Let’s also examine hedge fund activity in other stocks similar to Wausau Paper Corp. (NYSE:WPP). These stocks are Vimicro International Corporation (ADR) (NASDAQ:VIMC), Build-A-Bear Workshop, Inc (NYSE:BBW), Ecopetrol S.A. (ADR) (NYSE:EC), and EZCORP Inc (NASDAQ:EZPW). All of these stocks’ market caps match WPP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VIMC | 5 | 9188 | 3 |
| BBW | 15 | 54221 | -1 |
| EC | 6 | 36169 | 2 |
| EZPW | 17 | 68103 | -4 |
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $116 million in WPP’s case. EZCORP Inc (NASDAQ:EZPW) is the most popular stock in this table. On the other hand Vimicro International Corporation (ADR) (NASDAQ:VIMC) is the least popular one with only 5 bullish hedge fund positions. Wausau Paper Corp. (NYSE:WPP) is the most popular stock in this group and that makes it worth a closer look.
