Why are hedgies dumping The Western Union Company (NYSE:WU)?
In the financial world, there are many metrics shareholders can use to watch stocks. A duo of the most under-the-radar are hedge fund and insider trading sentiment. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat their index-focused peers by a healthy margin (see just how much).
Equally as crucial, optimistic insider trading sentiment is another way to analyze the marketplace. There are lots of motivations for a bullish insider to sell shares of his or her company, but just one, very clear reason why they would initiate a purchase. Many empirical studies have demonstrated the market-beating potential of this method if piggybackers understand where to look (learn more here).
Furthermore, it's important to analyze the latest info for The Western Union Company (NYSE:WU).
At Q2's end, a total of 32 of the hedge funds we track were bullish in this stock, a change of -11% from one quarter earlier. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings significantly.
Out of the hedge funds we follow, Abrams Capital Management, managed by David Abrams, holds the most valuable position in The Western Union Company (NYSE:WU). Abrams Capital Management has a $297.1 million position in the stock, comprising 17.2% of its 13F portfolio. Coming in second is John W. Rogers of Ariel Investments, with a $182.9 million position; 3% of its 13F portfolio is allocated to the company. Some other peers that hold long positions include Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Bernard Horn's Polaris Capital Management and James Melcher's Balestra.
Judging by the fact that The Western Union Company (NYSE:WU) has witnessed bearish sentiment from the entirety of the hedge funds we track, it's easy to see that there was a specific group of funds that slashed their entire stakes last quarter. Interestingly, John Shapiro's Chieftain Capital dumped the largest investment of the "upper crust" of funds we monitor, comprising close to $98.5 million in stock. Glenn Russell Dubin's fund, Highbridge Capital Management, also cut its stock, about $25.1 million worth. These bearish behaviors are interesting, as total hedge fund interest dropped by 4 funds last quarter.
Insider buying is best served when the primary stock in question has experienced transactions within the past 180 days. Over the last half-year time frame, The Western Union Company (NYSE:WU) has experienced 1 unique insiders purchasing, and zero insider sales (see the details of insider trades here).
We'll check out the relationship between both of these indicators in other stocks similar to The Western Union Company (NYSE:WU). These stocks are Discover Financial Services (NYSE:DFS), ORIX Corporation (ADR) (NYSE:IX), Equifax Inc. (NYSE:EFX), SLM Corp (NASDAQ:SLM), and CIT Group Inc. (NYSE:CIT). This group of stocks belong to the credit services industry and their market caps are similar to WU's market cap.