Were Hedge Funds Right About Piling Into WestRock Company (WRK)?

In this article we will check out the progression of hedge fund sentiment towards WestRock Company (NYSE:WRK) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Is WestRock Company (NYSE:WRK) the right investment to pursue these days? The best stock pickers were in a bullish mood. The number of long hedge fund bets moved up by 11 lately. WestRock Company (NYSE:WRK) was in 43 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 42. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WRK isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 32 hedge funds in our database with WRK holdings at the end of September.

In the financial world there are numerous gauges stock traders use to size up publicly traded companies. Two of the most innovative gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the top fund managers can outperform the S&P 500 by a very impressive margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 197% since March 2017 (through March 2021) and beat the S&P 500 Index by 124 percentage points. You can download a sample issue of this newsletter on our website .

Peter Rathjens of Arrowstreet Capital

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 take a gander at the fresh hedge fund action regarding WestRock Company (NYSE:WRK).

Do Hedge Funds Think WRK Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 34% from the previous quarter. By comparison, 35 hedge funds held shares or bullish call options in WRK a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Impax Asset Management was the largest shareholder of WestRock Company (NYSE:WRK), with a stake worth $119.1 million reported as of the end of December. Trailing Impax Asset Management was Arrowstreet Capital, which amassed a stake valued at $81.5 million. Citadel Investment Group, Millennium 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 14.69% of its 13F portfolio. Verdad Advisers is also relatively very bullish on the stock, setting aside 5.69 percent of its 13F equity portfolio to WRK.

There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.

Let’s now review 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 DENTSPLY SIRONA Inc. (NASDAQ:XRAY), Equitable Holdings, Inc. (NYSE:EQH), Appian Corporation (NASDAQ:APPN), UDR, Inc. (NYSE:UDR), Yatsen Holding Limited (NYSE:YSG), Whirlpool Corporation (NYSE:WHR), and Kirkland Lake Gold Ltd. (NYSE:KL). All of these stocks’ market caps match WRK’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 29 hedge funds with bullish positions and the average amount invested in these stocks was $857 million. That figure was $669 million in WRK’s case. Equitable Holdings, Inc. (NYSE:EQH) is the most popular stock in this table. On the other hand UDR, Inc. (NYSE:UDR) is the least popular one with only 23 bullish hedge fund positions. WestRock Company (NYSE:WRK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WRK is 83.5. 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 gained 13.6% in 2021 through April 30th and still beat the market by 1.6 percentage points. Hedge funds were also right about betting on WRK as the stock returned 28.7% since the end of Q4 (through 4/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

Disclosure: None. This article was originally published at Insider Monkey.

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