Does WEX Inc (NYSE:WEX) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
WEX Inc (NYSE:WEX) shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 28 hedge funds’ portfolios at the end of September. At the end of this article we will also compare WEX to other stocks including Robert Half International Inc. (NYSE:RHI), Allegion plc (NYSE:ALLE), and Qiagen NV (NASDAQ:QGEN) to get a better sense of its popularity.
At the moment there are a multitude of tools market participants use to value publicly traded companies. Two of the less known tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best money managers can beat the market by a very impressive amount (see the details here).
We’re going to take a gander at the new hedge fund action encompassing WEX Inc (NYSE:WEX).
What does the smart money think about WEX Inc (NYSE:WEX)?
At the end of the third quarter, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, no change from the previous quarter. By comparison, 19 hedge funds held shares or bullish call options in WEX heading into this year. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, PAR Capital Management held the most valuable stake in WEX Inc (NYSE:WEX), which was worth $137.5 million at the end of the third quarter. On the second spot was Echo Street Capital Management which amassed $62.2 million worth of shares. Moreover, Columbus Circle Investors, Daruma Asset Management, and Point72 Asset Management were also bullish on WEX Inc (NYSE:WEX), allocating a large percentage of their portfolios to this stock.
Due to the fact that WEX Inc (NYSE:WEX) has faced declining sentiment from the smart money, we can see that there were a few hedge funds who were dropping their positions entirely heading into Q3. It’s worth mentioning that Israel Englander’s Millennium Management dropped the largest stake of the 700 funds followed by Insider Monkey, totaling close to $66.5 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dumped its stock, about $35.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s go over hedge fund activity in other stocks similar to WEX Inc (NYSE:WEX). These stocks are Robert Half International Inc. (NYSE:RHI), Allegion plc (NYSE:ALLE), Qiagen NV (NASDAQ:QGEN), and Equity Lifestyle Properties, Inc. (NYSE:ELS). This group of stocks’ market caps resemble WEX’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| RHI | 28 | 541405 | 9 |
| ALLE | 15 | 554077 | 3 |
| QGEN | 24 | 415251 | 2 |
| ELS | 14 | 528054 | 0 |
| Average | 20.25 | 509697 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $510 million. That figure was $561 million in WEX’s case. Robert Half International Inc. (NYSE:RHI) is the most popular stock in this table. On the other hand Equity Lifestyle Properties, Inc. (NYSE:ELS) is the least popular one with only 14 bullish hedge fund positions. WEX Inc (NYSE:WEX) 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 RHI might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
