We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Willis Towers Watson Public Limited Company (NASDAQ:WLTW) and determine whether hedge funds skillfully traded this stock.
Is Willis Towers Watson Public Limited Company (NASDAQ:WLTW) worth your attention right now? Hedge funds were taking an optimistic view. The number of long hedge fund bets moved up by 5 lately. Willis Towers Watson Public Limited Company (NASDAQ:WLTW) was in 75 hedge funds’ portfolios at the end of September. The all time high for this statistic was previously 70. 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 Q3 rankings). There were 70 hedge funds in our database with WLTW holdings at the end of June.
Ole Andreas Halvorsen of Viking Global
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 we’re going to view the key hedge fund action regarding Willis Towers Watson Public Limited Company (NASDAQ:WLTW).
Do Hedge Funds Think WLTW Is A Good Stock To Buy Now?
At third quarter’s end, a total of 75 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the second quarter of 2021. By comparison, 51 hedge funds held shares or bullish call options in WLTW a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Eagle Capital Management was the largest shareholder of Willis Towers Watson Public Limited Company (NASDAQ:WLTW), with a stake worth $484.3 million reported as of the end of September. Trailing Eagle Capital Management was Cantillon Capital Management, which amassed a stake valued at $387.9 million. Farallon Capital, Millennium Management, and Viking Global 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 Twin Capital Management allocated the biggest weight to Willis Towers Watson Public Limited Company (NASDAQ:WLTW), around 11.96% of its 13F portfolio. Steel Canyon Capital is also relatively very bullish on the stock, dishing out 11.63 percent of its 13F equity portfolio to WLTW.
Now, key hedge funds were leading the bulls’ herd. Viking Global, managed by Andreas Halvorsen, initiated the biggest position in Willis Towers Watson Public Limited Company (NASDAQ:WLTW). Viking Global had $269.6 million invested in the company at the end of the quarter. Larry Robbins’s Glenview Capital also initiated a $193.6 million position during the quarter. The other funds with new positions in the stock are Ricky Sandler’s Eminence Capital, John Smith Clark’s Southpoint Capital Advisors, and Steve Cohen’s Point72 Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to Willis Towers Watson Public Limited Company (NASDAQ:WLTW). We will take a look at Garmin Ltd. (NASDAQ:GRMN), TELUS Corporation (NYSE:TU), Paycom Software Inc (NYSE:PAYC), ANSYS, Inc. (NASDAQ:ANSS), Fastenal Company (NASDAQ:FAST), ArcelorMittal (NYSE:MT), and Ecopetrol S.A. (NYSE:EC). This group of stocks’ market valuations resemble WLTW’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| GRMN | 30 | 465208 | 5 |
| TU | 12 | 141291 | -1 |
| PAYC | 40 | 1424558 | 1 |
| ANSS | 38 | 1493156 | -8 |
| FAST | 30 | 609114 | 5 |
| MT | 20 | 1012692 | -2 |
| EC | 6 | 64885 | 0 |
| Average | 25.1 | 744415 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 25.1 hedge funds with bullish positions and the average amount invested in these stocks was $744 million. That figure was $5055 million in WLTW’s case. Paycom Software Inc (NYSE:PAYC) is the most popular stock in this table. On the other hand Ecopetrol S.A. (NYSE:EC) is the least popular one with only 6 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 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 still managed to beat the market by another 3.6 percentage points. Hedge funds were somewhat right about betting on WLTW as the stock returned 1% since the end of September (through January 31st) and outperformed the top 5 hedge fund stocks but not the market. This is a rare phenomenon as top hedge fund stocks usually beat the market over the long-term.
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Disclosure: None. This article was originally published at Insider Monkey.
