Where Do Hedge Funds Stand On West Pharmaceutical Services Inc. (WST)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do (like Melvin Capital’s recent GameStop losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards West Pharmaceutical Services Inc. (NYSE:WST).

West Pharmaceutical Services Inc. (NYSE:WST) was in 31 hedge funds’ portfolios at the end of June. The all time high for this statistic is 41. WST has experienced an increase in enthusiasm from smart money recently. There were 26 hedge funds in our database with WST holdings at the end of March. Our calculations also showed that WST isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At the moment there are plenty of methods market participants employ to appraise their holdings. Two of the most under-the-radar methods are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best investment managers can outpace their index-focused peers by a significant amount (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Ken Fisher of Fisher Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now we’re going to take a gander at the recent hedge fund action encompassing West Pharmaceutical Services Inc. (NYSE:WST).

Do Hedge Funds Think WST Is A Good Stock To Buy Now?

At the end of the second quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 19% from the first quarter of 2020. By comparison, 27 hedge funds held shares or bullish call options in WST a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Among these funds, Arrowstreet Capital held the most valuable stake in West Pharmaceutical Services Inc. (NYSE:WST), which was worth $130 million at the end of the second quarter. On the second spot was Fisher Asset Management which amassed $103.3 million worth of shares. Intermede Investment Partners, Marshall Wace LLP, and AQR Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Intermede Investment Partners allocated the biggest weight to West Pharmaceutical Services Inc. (NYSE:WST), around 1.82% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, setting aside 1.23 percent of its 13F equity portfolio to WST.

Now, some big names have jumped into West Pharmaceutical Services Inc. (NYSE:WST) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the largest position in West Pharmaceutical Services Inc. (NYSE:WST). Marshall Wace LLP had $55.8 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $9.9 million investment in the stock during the quarter. The other funds with brand new WST positions are Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, Greg Poole’s Echo Street Capital Management, and Karim Abbadi and Edward McBride’s Centiva Capital.

Let’s now review hedge fund activity in other stocks similar to West Pharmaceutical Services Inc. (NYSE:WST). These stocks are RingCentral Inc (NYSE:RNG), Carnival Corporation & plc (NYSE:CUK), Futu Holdings Limited (NASDAQ:FUTU), Tencent Music Entertainment Group (NYSE:TME), Etsy Inc (NASDAQ:ETSY), Generac Holdings Inc. (NYSE:GNRC), and Slack Technologies Inc (NYSE:WORK). All of these stocks’ market caps match WST’s market cap.

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As you can see these stocks had an average of 38.4 hedge funds with bullish positions and the average amount invested in these stocks was $1848 million. That figure was $563 million in WST’s case. Slack Technologies Inc (NYSE:WORK) is the most popular stock in this table. On the other hand Carnival Corporation & plc (NYSE:CUK) is the least popular one with only 10 bullish hedge fund positions. West Pharmaceutical Services Inc. (NYSE:WST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WST is 53.3. 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. 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 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. A small number of hedge funds were also right about betting on WST as the stock returned 12.8% since the end of the second quarter (through 10/15) and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.