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 Jeff Ubben, George Soros and Carl Icahn 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 elite funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze WW International, Inc. (NASDAQ:WW).
WW International, Inc. (NASDAQ:WW) has seen an increase in activity from the world’s largest hedge funds in recent months. WW was in 21 hedge funds’ portfolios at the end of the second quarter of 2019. There were 20 hedge funds in our database with WW positions at the end of the previous quarter. Our calculations also showed that WW isn’t among the 30 most popular stocks among hedge funds (see the video below).
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 market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the new hedge fund action encompassing WW International, Inc. (NASDAQ:WW).
What have hedge funds been doing with WW International, Inc. (NASDAQ:WW)?
Heading into the third quarter of 2019, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WW over the last 16 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in WW International, Inc. (NASDAQ:WW) was held by Eminence Capital, which reported holding $83.4 million worth of stock at the end of March. It was followed by AQR Capital Management with a $52.3 million position. Other investors bullish on the company included D E Shaw, Renaissance Technologies, and Stadium Capital Management.
Consequently, key hedge funds were breaking ground themselves. Eminence Capital, managed by Ricky Sandler, created the largest position in WW International, Inc. (NASDAQ:WW). Eminence Capital had $83.4 million invested in the company at the end of the quarter. Gregg Moskowitz’s Interval Partners also made a $9.7 million investment in the stock during the quarter. The other funds with new positions in the stock are Gregg Moskowitz’s Interval Partners, Mike Vranos’s Ellington, and Constantinos J. Christofilis’s Archon Capital Management.
Let’s also examine hedge fund activity in other stocks similar to WW International, Inc. (NASDAQ:WW). These stocks are Corporacion America Airports SA (NYSE:CAAP), STAAR Surgical Company (NASDAQ:STAA), LendingClub Corporation (NYSE:LC), and AeroVironment, Inc. (NASDAQ:AVAV). This group of stocks’ market values are closest to WW’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CAAP | 11 | 51854 | -1 |
| STAA | 16 | 556099 | -5 |
| LC | 10 | 4343 | -1 |
| AVAV | 12 | 38843 | -1 |
| Average | 12.25 | 162785 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $163 million. That figure was $286 million in WW’s case. STAAR Surgical Company (NASDAQ:STAA) is the most popular stock in this table. On the other hand LendingClub Corporation (NYSE:LC) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks WW International, Inc. (NASDAQ:WW) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on WW as the stock returned 98% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
