Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Wesco Aircraft Holdings Inc (NYSE:WAIR).
Wesco Aircraft Holdings’ stock has lost 12% since the beginning of the year and is trading at 11.9 times forward earnings. However, the best stock pickers are in a pessimistic mood and the number of long hedge fund bets decreased by 4 in recent months. At the end of this article we will also compare WAIR to other stocks, including BBCN Bancorp, Inc. (NASDAQ:BBCN), TopBuild Corp (NYSE:BLD), and Talmer Bancorp Inc (NASDAQ:TLMR) to get a better sense of its popularity.
Follow Wesco Aircraft Holdings Inc (NYSE:WAIR)
Follow Wesco Aircraft Holdings Inc (NYSE:WAIR)
Today there are plenty of indicators shareholders put to use to assess their stock investments. A duo of the most innovative indicators are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite fund managers can outpace the S&P 500 by a very impressive amount (see the details here).
Keeping this in mind, let’s take a peek at the latest action surrounding Wesco Aircraft Holdings Inc (NYSE:WAIR).
How are hedge funds trading Wesco Aircraft Holdings Inc (NYSE:WAIR)?
Heading into Q4, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a decline of 24% from the second quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Thomas Bancroft’s Makaira Partners has the largest position in Wesco Aircraft Holdings Inc (NYSE:WAIR), worth close to $89.3 million, amounting to 14.5% of its total 13F portfolio. Sitting at the No. 2 spot is MSD Capital, led by Glenn Fuhrman and John Phelan, holding a $62.5 million position; the fund has 8.3% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism comprise Wallace Weitz’s Wallace R. Weitz & Co., Chuck Royce’s Royce & Associates, and Charles Clough’s Clough Capital Partners.
Because Wesco Aircraft Holdings Inc (NYSE:WAIR) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there is a sect of money managers who sold off their entire stakes in the third quarter. It’s worth mentioning that Will Snellings’s Marianas Fund Management said goodbye to the biggest stake of all the hedgies followed by Insider Monkey, comprising close to $5.3 million in stock, and Rob Romero’s Connective Capital Management was right behind this move, as the fund sold off about $1.4 million worth of shares. These bearish behaviors are important to note, as total hedge fund interest was cut by 4 funds in the third quarter.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Wesco Aircraft Holdings Inc (NYSE:WAIR) but similarly valued. These stocks are BBCN Bancorp, Inc. (NASDAQ:BBCN), TopBuild Corp (NYSE:BLD), Talmer Bancorp Inc (NASDAQ:TLMR), and First Financial Bancorp (NASDAQ:FFBC). This group of stocks’ market caps are closest to WAIR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BBCN | 7 | 49524 | -1 |
| BLD | 23 | 241387 | 20 |
| TLMR | 14 | 84803 | -1 |
| FFBC | 11 | 26022 | 3 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $100 million, compared to $256 million in WAIR’s case. TopBuild Corp (NYSE:BLD) is the most popular stock in this table. On the other hand BBCN Bancorp, Inc. (NASDAQ:BBCN) is the least popular one with only 7 bullish hedge fund positions. Wesco Aircraft Holdings Inc (NYSE:WAIR) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard BLD might be a better candidate to consider a long position.
