At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Willdan Group, Inc. (NASDAQ:WLDN) makes for a good investment right now.
Willdan Group, Inc. (NASDAQ:WLDN) investors should pay attention to an increase in hedge fund sentiment lately. WLDN was in 6 hedge funds’ portfolios at the end of the third quarter of 2019. There were 5 hedge funds in our database with WLDN positions at the end of the previous quarter. Our calculations also showed that WLDN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Richard Driehaus of Driehaus Capital
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. With all of this in mind let’s review the latest hedge fund action encompassing Willdan Group, Inc. (NASDAQ:WLDN).
Hedge fund activity in Willdan Group, Inc. (NASDAQ:WLDN)
At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a change of 20% from the previous quarter. On the other hand, there were a total of 6 hedge funds with a bullish position in WLDN a year ago. 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 Willdan Group, Inc. (NASDAQ:WLDN) was held by Driehaus Capital, which reported holding $8.4 million worth of stock at the end of September. It was followed by Winton Capital Management with a $0.5 million position. Other investors bullish on the company included PDT Partners, Citadel Investment Group, and AQR Capital Management. In terms of the portfolio weights assigned to each position Driehaus Capital allocated the biggest weight to Willdan Group, Inc. (NASDAQ:WLDN), around 0.27% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, designating 0.02 percent of its 13F equity portfolio to WLDN.
Consequently, specific money managers were leading the bulls’ herd. Marshall Wace, managed by Paul Marshall and Ian Wace, initiated the most valuable position in Willdan Group, Inc. (NASDAQ:WLDN). Marshall Wace had $0 million invested in the company at the end of the quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Willdan Group, Inc. (NASDAQ:WLDN) but similarly valued. We will take a look at BioSpecifics Technologies Corp. (NASDAQ:BSTC), AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG), Himax Technologies, Inc. (NASDAQ:HIMX), and Roadrunner Transportation Systems Inc (NYSE:RRTS). This group of stocks’ market caps match WLDN’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BSTC | 12 | 58911 | 1 |
| AMAG | 15 | 188076 | -2 |
| HIMX | 2 | 10401 | -6 |
| RRTS | 3 | 356938 | 1 |
| Average | 8 | 153582 | -1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $10 million in WLDN’s case. AMAG Pharmaceuticals, Inc. (NASDAQ:AMAG) is the most popular stock in this table. On the other hand Himax Technologies, Inc. (NASDAQ:HIMX) is the least popular one with only 2 bullish hedge fund positions. Willdan Group, Inc. (NASDAQ:WLDN) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately WLDN wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WLDN investors were disappointed as the stock returned -18.7% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
