Western Digital Corp. (WDC): Are Hedge Funds Right About This Stock?

Like everyone else, elite investors make mistakes. Some of their top consensus picks, such as Micron and Anadarko Petroleum, have not done well during the last 12 months ending in October due to various reasons. Nevertheless, the data show elite investors’ consensus picks have done well on average. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last four quarters ending in October and sixty three percent of these 30 stocks outperformed the market. S&P 500 Index returned only 5.2% during the same period and less than 49% of its constituents managed to beat this return. Because their consensus picks have done well, we pay attention to what elite funds think before doing extensive research on a stock. In this article, we take a closer look at Western Digital Corp. (NASDAQ:WDC) from the perspective of those elite funds.

Is Western Digital Corp. going to take off soon? Hedge funds are taking a bullish view. The number of long hedge fund bets moved up by 2 lately. At the end of this article we will also compare WDC to other stocks including Twitter Inc (NYSE:TWTR), Boston Properties, Inc. (NYSE:BXP), and Sasol Limited (ADR) (NYSE:SSL) to get a better sense of its popularity.

Now, we’re going to view the fresh action encompassing Western Digital Corp. (NASDAQ:WDC).

How have hedgies been trading Western Digital Corp. (NASDAQ:WDC)?

At the end of the third quarter, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the biggest position in Western Digital Corp. (NASDAQ:WDC), worth close to $457.6 million, corresponding to 0.4% of its total 13F portfolio. The second most bullish fund manager is D E Shaw, which holds a $245.5 million position; 0.4% of its 13F portfolio is allocated to the company. Some other professional money managers with similar optimism include Curtis Macnguyen’s Ivory Capital (Investment Mgmt), Cliff Asness’ AQR Capital Management and Anand Parekh’s Alyeska Investment Group.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Maplelane Capital, managed by Leon Shaulov, assembled the most valuable call position in Western Digital Corp. (NASDAQ:WDC). Maplelane Capital had $59.6 million invested in the company at the end of the quarter. John Brennan’s Sirios Capital Management also initiated a $36.5 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Steve Cohen’s Point72 Asset Management, and Ken Hahn’s Quentec Asset Management.

Let’s now review hedge fund activity in other stocks similar to Western Digital Corp. (NASDAQ:WDC). We will take a look at Twitter Inc (NYSE:TWTR), Boston Properties, Inc. (NYSE:BXP), Sasol Limited (ADR) (NYSE:SSL), and Pioneer Natural Resources (NYSE:PXD). This group of stocks’ market caps resemble WDC’s market cap.

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 $1,291 million. That figure was $2,249 million in WDC’s case. Pioneer Natural Resources (NYSE:PXD) is the most popular stock in this table. On the other hand Sasol Limited (ADR) (NYSE:SSL) is the least popular one with only 10 bullish hedge fund positions. Western Digital Corp. (NASDAQ:WDC) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PXD might be a better candidate to consider a long position.