We know that hedge funds generate strong, risk-adjusted returns over the long run, therefore imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, smart money investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn't mean that they don't have occasional colossal losses; they do (like Peltz's recent General Electric losses). However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, as the current round of 13F filings has just ended, let’s examine the smart money sentiment towards WESCO International, Inc. (NYSE: WCC ).
WESCO International, Inc. (NYSE: WCC ) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 26 hedge funds' portfolios at the end of March. At the end of this article we will also compare WCC to other stocks including Columbia Banking System Inc (NASDAQ: COLB ), Ares Management Corporation (NYSE: ARES ), and Prospect Capital Corporation (NASDAQ: PSEC ) to get a better sense of its popularity.
To most traders, hedge funds are seen as unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds trading at present, Our experts choose to focus on the upper echelon of this club, approximately 750 funds. These money managers administer most of all hedge funds' total asset base, and by following their finest investments, Insider Monkey has determined a number of investment strategies that have historically exceeded the broader indices. Insider Monkey's flagship hedge fund strategy outstripped the S&P 500 index by around 5 percentage points a year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman, GLG Partners[/caption]
Let's take a look at the new hedge fund action surrounding WESCO International, Inc. (NYSE: WCC ).
How have hedgies been trading WESCO International, Inc. (NYSE:WCC)?
At Q1's end, a total of 26 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards WCC over the last 15 quarters. So, let's examine 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, Blue Harbour Group , managed by Clifton S. Robbins, holds the most valuable position in WESCO International, Inc. (NYSE:WCC). Blue Harbour Group has a $211.5 million position in the stock, comprising 12.4% of its 13F portfolio. The second most bullish fund manager is AQR Capital Management , managed by Cliff Asness, which holds a $93.9 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds and institutional investors with similar optimism include Bernard Horn's Polaris Capital Management , D. E. Shaw's D E Shaw and Noam Gottesman's GLG Partners .
Because WESCO International, Inc. (NYSE:WCC) has witnessed bearish sentiment from the aggregate hedge fund industry, it's safe to say that there were a few fund managers that slashed their positions entirely last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dropped the biggest position of all the hedgies watched by Insider Monkey, valued at about $0.8 million in stock. Alec Litowitz and Ross Laser's fund, Magnetar Capital , also dropped its stock, about $0.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks similar to WESCO International, Inc. (NYSE:WCC). We will take a look at Columbia Banking System Inc (NASDAQ: COLB ), Ares Management Corporation (NYSE: ARES ), Prospect Capital Corporation (NASDAQ: PSEC ), and Baozun Inc (NASDAQ: BZUN ). This group of stocks' market values match WCC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position COLB,8,120607,-2 ARES,14,232188,3 PSEC,11,16611,0 BZUN,14,60742,0 Average,11.75,107537,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $108 million. That figure was $467 million in WCC's case. Ares Management Corporation (NYSE: ARES ) is the most popular stock in this table. On the other hand Columbia Banking System Inc (NASDAQ: COLB ) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks WESCO International, Inc. (NYSE:WCC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately WCC wasn't nearly as popular as these 20 stocks and hedge funds that were betting on WCC were disappointed as the stock returned -9.8% during the same period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey .