It was a rough third quarter for many hedge funds, which were naturally unable to overcome the big dip in the broad market, as the S&P 500 fell by about 7% during the quarter. The Russell 2000, composed of smaller companies, performed even worse, trailing the S&P by about 14 percentage points between June 25 and October 30, as investors fled less-known quantities for safe havens. This was the case with hedge funds, who we heard were pulling money from the market amid the volatility, which included money from small-cap stocks, which they invest in at a higher rate than other investors. This action contributed to the greater decline in these stocks during the tumultuous period. We will study how this market volatility affected their sentiment towards Westar Energy Inc (NYSE:WR) during the quarter below.
Westar Energy Inc (NYSE:WR) shareholders have witnessed an increase in hedge fund interest recently. Westar Energy Inc was in 10 hedge funds’ portfolios at the end of the third quarter of 2015. There were 9 hedge funds in our database with Westar Energy Inc positions at the end of the previous quarter. At the end of this article we will also compare Westar Energy Inc to other stocks including Carlyle Group LP (NASDAQ:CG), IAC/InterActiveCorp (NASDAQ:IACI), and EnCana Corporation (USA) (NYSE:ECA) to get a better sense of its popularity.
To most investors, hedge funds are assumed to be worthless, outdated investment tools of years past. While there are more than 8,000 funds in operation at present, our researchers look at the masters of this club, about 700 funds. These money managers have their hands on bulk of all hedge funds’ total capital, and by keeping an eye on their best equity investments, Insider Monkey has unearthed several investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outstripped the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, we’re going to check out the recent action encompassing Westar Energy Inc (NYSE:WR).
Hedge fund activity in Westar Energy Inc (NYSE:WR)
Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 11% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Mario Gabelli’s GAMCO Investors has the most valuable position in Westar Energy Inc (NYSE:WR), worth close to $43.1 million, amounting to 0.3% of its total 13F portfolio. The second-largest stake is held by Renaissance Technologies, holding a $32 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other members of the smart money that hold long positions comprise Dmitry Balyasny’s Balyasny Asset Management, Israel Englander’s Millennium Management, and Cliff Asness’ AQR Capital Management.
As aggregate interest increased, key money managers were leading the bulls’ herd. Visium Asset Management, managed by Jacob Gottlieb, initiated the most outsized position in Westar Energy Inc (NYSE:WR). Visium Asset Management had $3.7 million invested in the company at the end of the quarter. George Hall’s Clinton Group also initiated a $1 million position during the quarter. The only other fund with a new position in the stock is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Westar Energy Inc (NYSE:WR) but similarly valued. These stocks are Carlyle Group LP (NASDAQ:CG), IAC/InterActiveCorp (NASDAQ:IACI), EnCana Corporation (USA) (NYSE:ECA), and Axis Capital Holdings Limited (NYSE:AXS). This group of stocks’ market values resemble Westar Energy Inc’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $659 million. That figure was $122 million in Westar Energy Inc’s case. IAC/InterActiveCorp (NASDAQ:IACI) is the most popular stock in this table. On the other hand Carlyle Group LP (NASDAQ:CG) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Westar Energy Inc (NYSE:WR) is even less popular than Carlyle Group. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock or putting much money into it. As it is, we think a stock like IAC makes for a better starting point in one’s research.