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.
Weatherford International Ltd (NYSE:WFT) was in 29 hedge funds’ portfolios at the end of the third quarter of 2015. WFT investors should pay attention to a decrease in hedge fund interest recently. There were 37 hedge funds in our database with WFT positions at the end of the previous quarter. At the end of this article we will also compare WFT to other stocks including Broadridge Financial Solutions, Inc. (NYSE:BR), Iron Mountain Incorporated (NYSE:IRM), and Western Gas Partners, LP (NYSE:WES) to get a better sense of its popularity.
Follow Weatherford International Ltd (TSE:WFT)
Follow Weatherford International Ltd (TSE:WFT)
Today there are many gauges shareholders have at their disposal to analyze stocks. Some of the less utilized gauges are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the top picks of the top investment managers can beat the S&P 500 by a healthy margin (see the details here).
Keeping this in mind, let’s take a gander at the key action regarding Weatherford International Ltd (NYSE:WFT).
How have hedgies been trading Weatherford International Ltd (NYSE:WFT)?
At the end of the third quarter, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -22% from one quarter earlier. With hedge funds’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Orbis Investment Management, managed by William B. Gray, holds the number one position in Weatherford International Ltd (NYSE:WFT). Orbis Investment Management has a $178.8 million position in the stock, comprising 1.5% of its 13F portfolio. The second most bullish fund manager is Millennium Management, led by Israel Englander, holding a $126.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions contain Mario Gabelli’s GAMCO Investors, Anand Parekh’s Alyeska Investment Group and Ken Griffin’s Citadel Investment Group.
Seeing as Weatherford International Ltd (NYSE:WFT) has experienced bearish sentiment from the smart money, logic holds that there was a specific group of hedgies who sold off their entire stakes last quarter. Interestingly, Marc Lisker, Glenn Fuhrman and John Phelan’s MSDC Management said goodbye to the biggest position of the “upper crust” of funds watched by Insider Monkey, totaling close to $24.2 million in stock. John Orrico’s fund, Water Island Capital, also sold off its stock, about $7.8 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 8 funds last quarter.
Let’s now review hedge fund activity in other stocks similar to Weatherford International Ltd (NYSE:WFT). These stocks are Broadridge Financial Solutions, Inc. (NYSE:BR), Iron Mountain Incorporated (NYSE:IRM), Western Gas Partners, LP (NYSE:WES), and Israel Chemicals Ltd. (NYSE:ICL). This group of stocks’ market caps match WFT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BR | 25 | 304384 | 1 |
| IRM | 14 | 373721 | -5 |
| WES | 6 | 32933 | 2 |
| ICL | 5 | 154799 | -1 |
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was $598 million in WFT’s case. Broadridge Financial Solutions, Inc. (NYSE:BR) is the most popular stock in this table. On the other hand Israel Chemicals Ltd. (NYSE:ICL) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Weatherford International Ltd (NYSE:WFT) 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.
