Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about WestRock Company (NYSE:WRK).
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. WRK shareholders have witnessed an increase in enthusiasm from smart money of late. There were 32 hedge funds in our database with WRK holdings at the end of June. Our calculations also showed that WRK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Israel Englander of Millennium Management
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 review the fresh hedge fund action surrounding WestRock Company (NYSE:WRK).
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 bullish on this stock, a change of 6% from the previous quarter. By comparison, 32 hedge funds held shares or bullish call options in WRK a year ago. With hedgies’ sentiment swirling, there exists a few notable hedge fund managers who were adding to their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Impax Asset Management, managed by Ian Simm, holds the most valuable position in WestRock Company (NYSE:WRK). Impax Asset Management has a $257.2 million position in the stock, comprising 1.1% of its 13F portfolio. Sitting at the No. 2 spot is Lansdowne Partners, led by Suzi Nutton (CEO), holding a $115.9 million position; the fund has 5.5% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism contain Israel Englander’s Millennium Management, Cliff Asness’s AQR Capital Management and Anthony Bozza’s Lakewood Capital Management. 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, designating 5.46 percent of its 13F equity portfolio to WRK.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Lansdowne Partners, managed by Suzi Nutton (CEO), assembled the biggest 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 now review hedge fund activity in other stocks – not necessarily in the same industry as WestRock Company (NYSE:WRK) but similarly valued. These stocks are 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 28.6% in 2021 through November 30th and surpassed the market again by 5.6 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 -12.5% since the end of September (through 11/30) 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 most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.
