There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze WPP plc (NASDAQ:WPPGY).
WPP plc (NASDAQ:WPPGY) has seen an increase in enthusiasm from smart money in recent months. WPPGY was in 10 hedge funds’ portfolios at the end of the third quarter of 2016. There were 9 hedge funds in our database with WPPGY holdings at the end of the previous quarter. 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 Evercore Partners Inc. (NYSE:EVR), Hillenbrand, Inc. (NYSE:HI), and NGL Energy Partners LP (NYSE:NGL) to gather more data points.
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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Hedge fund activity in WPP plc (NASDAQ:WPPGY)
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a gain of 11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WPPGY over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Ken Fisher’s Fisher Asset Management has the largest position in WPP plc (NASDAQ:WPPGY), worth close to $59.5 million. On Fisher Asset Management’s heels is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital which holds a $46.7 million position. Some other members of the smart money that hold long positions include J. Alan Reid, Jr.’s Forward Management, Jim Simons’ Renaissance Technologies, which is one of the largest hedge funds in the world, and Ken Griffin’s Citadel Investment Group. We should note that Forward Management is 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 industrywide interest jumped, specific money managers have jumped into WPP plc (NASDAQ:WPPGY) headfirst. Citadel Investment Group established the largest position in WPP plc (NASDAQ:WPPGY) which had $0.4 million invested in the company at the end of the quarter. Robert B. Gillam’s McKinley Capital Management also initiated a $0.3 million position during the quarter. The only other fund with a brand new WPPGY position is Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.
Let’s now review hedge fund activity in other stocks similar to WPP PLC (ADR) (NASDAQ:WPPGY). These stocks are Evercore Partners Inc. (NYSE:EVR), Hillenbrand, Inc. (NYSE:HI), NGL Energy Partners LP (NYSE:NGL), and NetGear, Inc. (NASDAQ:NTGR). This group of stocks’ market caps match WPPGY’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EVR | 19 | 197858 | 0 |
| HI | 15 | 48712 | 3 |
| NGL | 6 | 14335 | 1 |
| NTGR | 17 | 138551 | -4 |
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $119 million in WPPGY’s case. Evercore Partners Inc. (NYSE:EVR) is the most popular stock in this table. On the other hand NGL Energy Partners LP (NYSE:NGL) is the least popular one with only 6 bullish hedge fund positions. WPP plc (NASDAQ:WPPGY) 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 EVR might be a better candidate to consider taking a long position in.
Disclosure: None
