Williams-Sonoma, Inc. (NYSE:WSM)’s shares jumped after the bell, but are currently slightly in the red after the retailer reported first-quarter earnings of $0.53 per share on sales of $1.09 billion, beating expectations by $0.03 per share and $10 million, respectively. Comparable brand revenue rose an astounding 4.5% year-over-year and E-commerce revenue did even better, climbing 8.2% year-over-year. There isn’t anything to dislike about guidance, with management expecting full-year revenue of $5.15 billion to $5.25 billion and full year EPS of $3.50 to $3.60. The midpoint of guidance nearly matches analyst expectations for the full year.
The better-than-expected results represents good news for hedge funds that amassed substantial positions in Williams-Sonoma heading into the second quarter. Overall, Williams-Sonoma, Inc. (NYSE:WSM) was in 31 hedge funds’ portfolios at the end of the first quarter of 2016, versus 21 hedge funds in our database with WSM positions at the end of the previous quarter. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Seattle Genetics, Inc. (NASDAQ:SGEN), Sonoco Products Company (NYSE:SON), and Bemis Company, Inc. (NYSE:BMS) to gather more data points.
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At the moment there are tons of methods market participants use to size up their stock investments. A couple of the most underrated methods are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite investment managers can outpace the broader indices by a significant amount (see the details here).
Of the funds tracked by Insider Monkey, Robert Joseph Caruso’s Select Equity Group has the number one position in Williams-Sonoma, Inc. (NYSE:WSM), worth close to $324.9 million, corresponding to 2.7% of its total 13F portfolio. The second largest stake is held by Jim Simons’ Renaissance Technologies, which holds a $40.1 million position; 0.1% of its 13F portfolio is allocated to the stock. Other hedge funds and institutional investors with similar optimism consist of Kamyar Khajavi’s MIK Capital, Joel Greenblatt’s Gotham Asset Management and Alexander Mitchell’s Scopus Asset Management.
Since the number of funds bullish on Williams-Sonoma increased during the first quarter, on the next page, we are going to take a closer look at some funds with new positions in the stock.
Consequently, specific money managers were breaking ground themselves. MIK Capital, managed by Kamyar Khajavi, established the most outsized position in Williams-Sonoma, Inc. (NYSE:WSM). MIK Capital had $28.2 million invested in the company at the end of the quarter. Joel Greenblatt’s Gotham Asset Management also initiated a $24.3 million position during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Gregg Moskowitz’s Interval Partners, and Gregg Moskowitz’s Interval Partners.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Williams-Sonoma, Inc. (NYSE:WSM) but similarly valued. We will take a look at Seattle Genetics, Inc. (NASDAQ:SGEN), Sonoco Products Company (NYSE:SON), Bemis Company, Inc. (NYSE:BMS), and STMicroelectronics N.V. (ADR) (NYSE:STM). This group of stocks’ market valuations are closest to WSM’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SGEN | 12 | 1580863 | -4 |
| SON | 17 | 131975 | -2 |
| BMS | 22 | 182092 | 7 |
| STM | 7 | 45480 | 1 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $485 million. That figure was $281 million in WSM’s case. Bemis Company, Inc. (NYSE:BMS) is the most popular stock in this table. On the other hand STMicroelectronics N.V. (ADR) (NYSE:STM) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Williams-Sonoma, Inc. (NYSE:WSM) 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
