At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Williams Companies, Inc. (NYSE:WMB).
Williams Companies, Inc. (NYSE:WMB) was in 47 hedge funds’ portfolios at the end of the first quarter of 2020. WMB investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. There were 40 hedge funds in our database with WMB holdings at the end of the previous quarter. Our calculations also showed that WMB isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are numerous formulas shareholders can use to value stocks. Two of the most innovative formulas are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the top investment managers can outpace the broader indices by a healthy margin (see the details here).
Mason Hawkins of Southeastern Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. Also, Europe is set to become the world’s largest cannabis market, so we checked out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a glance at the new hedge fund action encompassing Williams Companies, Inc. (NYSE:WMB).
Hedge fund activity in Williams Companies, Inc. (NYSE:WMB)
At Q1’s end, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WMB over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
More specifically, Southeastern Asset Management was the largest shareholder of Williams Companies, Inc. (NYSE:WMB), with a stake worth $191.6 million reported as of the end of September. Trailing Southeastern Asset Management was Levin Easterly Partners, which amassed a stake valued at $48.6 million. Millennium Management, Balyasny Asset Management, and GoldenTree Asset 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 Heronetta Management allocated the biggest weight to Williams Companies, Inc. (NYSE:WMB), around 5.9% of its 13F portfolio. Southeastern Asset Management is also relatively very bullish on the stock, earmarking 4.56 percent of its 13F equity portfolio to WMB.
As industrywide interest jumped, some big names have been driving this bullishness. GoldenTree Asset Management, managed by Steven Tananbaum, initiated the biggest position in Williams Companies, Inc. (NYSE:WMB). GoldenTree Asset Management had $22.2 million invested in the company at the end of the quarter. Jonathan Kolatch’s Redwood Capital Management also initiated a $20.9 million position during the quarter. The other funds with new positions in the stock are Steve Cohen’s Point72 Asset Management, Phill Gross and Robert Atchinson’s Adage Capital Management, and Howard Marks’s Oaktree Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Williams Companies, Inc. (NYSE:WMB) but similarly valued. We will take a look at Realty Income Corporation (NYSE:O), New Oriental Education & Technology Group Inc. (NYSE:EDU), Coca-Cola European Partners plc (NYSE:CCEP), and Snap Inc. (NYSE:SNAP). This group of stocks’ market caps match WMB’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| O | 25 | 225190 | -1 |
| EDU | 42 | 1555475 | -8 |
| CCEP | 22 | 185913 | 1 |
| SNAP | 48 | 929814 | -18 |
| Average | 34.25 | 724098 | -6.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.25 hedge funds with bullish positions and the average amount invested in these stocks was $724 million. That figure was $553 million in WMB’s case. Snap Inc. (NYSE:SNAP) is the most popular stock in this table. On the other hand Coca-Cola European Partners plc (NYSE:CCEP) is the least popular one with only 22 bullish hedge fund positions. Williams Companies, Inc. (NYSE:WMB) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but still beat the market by 15.6 percentage points. Hedge funds were also right about betting on WMB as the stock returned 38.9% in Q2 (through May 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
