How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don’t always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Whirlpool Corporation (NYSE:WHR).
Whirlpool Corporation (NYSE:WHR) was in 28 hedge funds’ portfolios at the end of March. The all time high for this statistic is 38. WHR investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. There were 32 hedge funds in our database with WHR positions at the end of the fourth quarter. Our calculations also showed that WHR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Tom Gayner of Markel Gayner Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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 analyze the fresh hedge fund action regarding Whirlpool Corporation (NYSE:WHR).
Do Hedge Funds Think WHR Is A Good Stock To Buy Now?
At Q1’s end, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WHR over the last 23 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
The largest stake in Whirlpool Corporation (NYSE:WHR) was held by Greenhaven Associates, which reported holding $613.3 million worth of stock at the end of December. It was followed by Lyrical Asset Management with a $354.4 million position. Other investors bullish on the company included Markel Gayner Asset Management, AQR Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Greenhaven Associates allocated the biggest weight to Whirlpool Corporation (NYSE:WHR), around 13.86% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, setting aside 4.16 percent of its 13F equity portfolio to WHR.
Due to the fact that Whirlpool Corporation (NYSE:WHR) has experienced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there lies a certain “tier” of fund managers who were dropping their positions entirely in the first quarter. Interestingly, Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors dropped the largest investment of all the hedgies monitored by Insider Monkey, totaling close to $12.9 million in stock, and Thyra Zerhusen’s Fairpointe Capital was right behind this move, as the fund cut about $4 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 4 funds in the first quarter.
Let’s go over hedge fund activity in other stocks similar to Whirlpool Corporation (NYSE:WHR). These stocks are Tata Motors Limited (NYSE:TTM), BioMarin Pharmaceutical Inc. (NASDAQ:BMRN), Williams-Sonoma, Inc. (NYSE:WSM), WestRock Company (NYSE:WRK), Loews Corporation (NYSE:L), NICE Ltd (NASDAQ:NICE), and Molina Healthcare, Inc. (NYSE:MOH). This group of stocks’ market caps resemble WHR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TTM | 8 | 67734 | 1 |
| BMRN | 43 | 1269182 | -8 |
| WSM | 29 | 758326 | 0 |
| WRK | 27 | 580223 | -16 |
| L | 21 | 200364 | 2 |
| NICE | 33 | 868132 | 7 |
| MOH | 31 | 1561071 | 4 |
| Average | 27.4 | 757862 | -1.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.4 hedge funds with bullish positions and the average amount invested in these stocks was $758 million. That figure was $1255 million in WHR’s case. BioMarin Pharmaceutical Inc. (NASDAQ:BMRN) is the most popular stock in this table. On the other hand Tata Motors Limited (NYSE:TTM) is the least popular one with only 8 bullish hedge fund positions. Whirlpool Corporation (NYSE:WHR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WHR is 51.7. 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 positive signal but 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 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately WHR wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WHR were disappointed as the stock returned 2.7% since the end of March (through 7/9) 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 many of these stocks already outperformed the market since 2019.
Follow Whirlpool Corp (NYSE:WHR)
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Disclosure: None. This article was originally published at Insider Monkey.
