“Value has performed relatively poorly since the 2017 shift, but we believe challenges to the S&P 500’s dominance are mounting and resulting active opportunities away from the index are growing. At some point, this fault line will break, likely on the back of rising rates, and all investors will be reminded that the best time to diversify away from the winners is when it is most painful. The bargain of capturing long-term value may be short-term pain, but enough is eventually enough and it comes time to harvest the benefits.,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on Weyerhaeuser Co. (NYSE:WY) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Is Weyerhaeuser Co. (NYSE:WY) the right investment to pursue these days? The smart money is in a bullish mood. The number of long hedge fund bets increased by 7 recently. Our calculations also showed that wy isn’t among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s go over the fresh hedge fund action encompassing Weyerhaeuser Co. (NYSE:WY).
What have hedge funds been doing with Weyerhaeuser Co. (NYSE:WY)?
At Q3’s end, a total of 35 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in WY over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Weyerhaeuser Co. (NYSE:WY) was held by Millennium Management, which reported holding $176.6 million worth of stock at the end of September. It was followed by Third Avenue Management with a $151.2 million position. Other investors bullish on the company included Two Sigma Advisors, Renaissance Technologies, and Adage Capital Management.
As aggregate interest increased, key hedge funds were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Weyerhaeuser Co. (NYSE:WY). Marshall Wace LLP had $17.5 million invested in the company at the end of the quarter. Ian Simm’s Impax Asset Management also initiated a $3.5 million position during the quarter. The other funds with new positions in the stock are Jeffrey Pierce’s Snow Park Capital Partners, Alec Litowitz and Ross Laser’s Magnetar Capital, and J. Alan Reid, Jr.’s Forward Management.
Let’s now take a look at hedge fund activity in other stocks similar to Weyerhaeuser Co. (NYSE:WY). These stocks are Equity Residential (NYSE:EQR), Brown-Forman Corporation (NYSE:BF), Parker-Hannifin Corporation (NYSE:PH), and Sasol Limited (NYSE:SSL). This group of stocks’ market caps are similar to WY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EQR | 23 | 432981 | -1 |
| BF | 22 | 725377 | 3 |
| PH | 27 | 824113 | 1 |
| SSL | 7 | 53180 | 1 |
| Average | 19.75 | 508913 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $509 million. That figure was $649 million in WY’s case. Parker-Hannifin Corporation (NYSE:PH) is the most popular stock in this table. On the other hand Sasol Limited (NYSE:SSL) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Weyerhaeuser Co. (NYSE:WY) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
