Is Towers Watson A Good Stock To Buy Now?

Hedge funds are rather cautious when it comes to Towers Watson & Co (NASDAQ:TW), with the number of funds holding a long position in the stock at the end of the second quarter having increased to 24 from 21 at the end of March, while the value of their investments fell by 17.4% to $379 million. Their holding is also rather insignificant, as it accounted for just 4.4% of the company’s outstanding stock. While Chuck Royce was dumping 30% of his stake in the company during the second quarter, leaving his fund with 786,371 shares, Donald Chiboucis, the manager of Columbus Circle Investors, was buying left and right, boosting his stake by 79% to 632,358 shares. Cliff Asness is also betting on the stock, upping his holding by 10% to 316,312 shares according to AQR Capital Management’s latest 13F filing.

Since the merger deal was made public, the price of Towers Watson & Co (NASDAQ:TW)’s shares has slumped by more than 12.5% and ended yesterday’s trading session at $120.50. Year-to-date, the stock is, however, up by 6.5%, as the company’s earnings improved in the first two quarters of 2015. For the three months ending June 30, Towers Watson posted revenues of $888 million, up by 1% year-over-year, while earnings came in at $1.35 per share, up from $1.16 per share posted for the second quarter of 2014. The stock is trading at a Price to Earnings (P/E) ratio of 21.xx, slightly below the industry average of 25.90.

Disclosure: None