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 third 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 6 years and analyze what the smart money thinks of WestRock Company (NYSE:WRK) based on that data and determine whether they were really smart about the stock.
Is WestRock Company (NYSE:WRK) undervalued? Investors who are in the know were turning bullish. The number of bullish hedge fund positions inched up by 2 lately. WestRock Company (NYSE:WRK) was in 34 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 43. Our calculations also showed that WRK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV 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. Now let’s view the fresh hedge fund action regarding WestRock Company (NYSE:WRK).
Dmitry Balyasny of Balyasny Asset Management
Do Hedge Funds Think WRK Is A Good Stock To Buy Now?
At the end of September, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in WRK a year ago. With hedgies’ capital changing hands, there exists a few key hedge fund managers who were adding to their stakes considerably (or already accumulated large positions).
Among these funds, Impax Asset Management held the most valuable stake in WestRock Company (NYSE:WRK), which was worth $257.2 million at the end of the third quarter. On the second spot was Lansdowne Partners which amassed $115.9 million worth of shares. Millennium Management, AQR Capital Management, and Lakewood Capital Management 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 Atlantic Investment Management allocated the biggest weight to WestRock Company (NYSE:WRK), around 15.75% of its 13F portfolio. Lansdowne Partners is also relatively very bullish on the stock, setting aside 5.46 percent of its 13F equity portfolio to WRK.
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Lansdowne Partners, managed by Suzi Nutton (CEO), initiated the most valuable position in WestRock Company (NYSE:WRK). Lansdowne Partners had $115.9 million invested in the company at the end of the quarter. John Murphy’s Levin Easterly Partners also initiated a $9.3 million position during the quarter. The other funds with new positions in the stock are Clint Carlson’s Carlson Capital, Dmitry Balyasny’s Balyasny Asset Management, and Javier Velazquez’s Albar Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as WestRock Company (NYSE:WRK) but similarly valued. We will take a look at Farfetch Limited (NYSE:FTCH), American Airlines Group Inc (NASDAQ:AAL), Teck Resources Ltd (NYSE:TECK), Open Text Corporation (NASDAQ:OTEX), Crown Holdings, Inc. (NYSE:CCK), Athene Holding Ltd. (NYSE:ATH), and Icahn Enterprises LP (NASDAQ:IEP). This group of stocks’ market caps are similar to WRK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| FTCH | 51 | 3258687 | -12 |
| AAL | 30 | 650793 | 5 |
| TECK | 41 | 1318693 | 1 |
| OTEX | 20 | 386647 | 6 |
| CCK | 52 | 2138745 | -1 |
| ATH | 49 | 1675122 | 6 |
| IEP | 4 | 12385467 | 0 |
| Average | 35.3 | 3116308 | 0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.3 hedge funds with bullish positions and the average amount invested in these stocks was $3116 million. That figure was $720 million in WRK’s case. Crown Holdings, Inc. (NYSE:CCK) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 4 bullish hedge fund positions. WestRock Company (NYSE:WRK) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WRK is 62. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and surpassed the market again by 3.6 percentage points. Unfortunately, WRK wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WRK investors were disappointed as the stock returned -6.9% since the end of September (through 1/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as all of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
