World Wrestling Entertainment, Inc. (WWE) Hedge Funds Are Snapping Up

Hedge funds run by legendary names like Nelson Peltz and David Tepper make billions of dollars a year for themselves and their super-rich accredited investors (you’ve got to have a minimum of $1 million liquid to invest in a hedge fund) by spending enormous resources on analyzing and uncovering data about small-cap stocks that the big brokerage houses don’t follow. Small caps are where they can generate significant out-performance. These stocks have been on a tear since the end of June, outperforming large-cap index funds by more than 10 percentage points. That’s why we pay special attention to hedge fund activity in these stocks.

World Wrestling Entertainment, Inc. (NYSE:WWE) has seen an increase in hedge fund sentiment of late. WWE was in 13 hedge funds’ portfolios at the end of the third quarter of 2016. There were 10 hedge funds in our database with WWE holdings at the end of the previous quarter. At the end of this article we will also compare WWE to other stocks including Stepan Company (NYSE:SCL), Columbia Pipeline Partners LP (NYSE:CPPL), and Fairmount Santrol Holdings Inc (NYSE:FMSA) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

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With all of this in mind, we’re going to take a look at the new action regarding World Wrestling Entertainment, Inc. (NYSE:WWE).

What does the smart money think about World Wrestling Entertainment, Inc. (NYSE:WWE)?

Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a boost of 30% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in WWE at the beginning of this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Eminence Capital, led by Ricky Sandler, holds the biggest position in World Wrestling Entertainment, Inc. (NYSE:WWE). The fund reportedly has a $73.1 million position in the stock, comprising 1.2% of its 13F portfolio. Sitting at the No. 2 spot is Dmitry Balyasny of Balyasny Asset Management, with a $17.3 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other professional money managers with similar optimism include David Forster and Peter Wilton’s IBIS Capital Partners, Thomas E. Claugus’s GMT Capital and Eduardo Costa’s Calixto Global Investors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As one would reasonably expect, key hedge funds were breaking ground themselves. Calixto Global Investors, led by Eduardo Costa, created the biggest position in World Wrestling Entertainment, Inc. (NYSE:WWE). According to regulatory filings, the fund had $9.1 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $4.3 million position during the quarter. The following funds were also among the new WWE investors: Benjamin A. Smith’s Laurion Capital Management and Ken Griffin’s Citadel Investment Group.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as World Wrestling Entertainment, Inc. (NYSE:WWE) but similarly valued. We will take a look at Stepan Company (NYSE:SCL), Columbia Pipeline Partners LP (NYSE:CPPL), Fairmount Santrol Holdings Inc (NYSE:FMSA), and Etsy Inc (NASDAQ:ETSY). This group of stocks’ market values are similar to WWE’s market value.

As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $154 million. That figure was $141 million in WWE’s case. Fairmount Santrol Holdings Inc (NYSE:FMSA) is the most popular stock in this table. On the other hand Columbia Pipeline Partners LP (NYSE:CPPL) is the least popular one with only 9 bullish hedge fund positions. World Wrestling Entertainment, Inc. (NYSE:WWE) 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. In this regard FMSA might be a better candidate to consider taking a long position in.

Disclosure: none.