Western Digital Corp (NASDAQ:WDC) has gained 2.35% in morning trading after being down by 3.5% at one point in the pre-market, as investors continue to digest the company’s guidance call yesterday, its first since its merger with SanDisk. For its fourth quarter of fiscal year 2016 ending July 1, Western Digital expects EPS of $0.65-to-$0.70 on sales of $3.35 billion-to-$3.40 billion, well below the previous guidance of $1.00-to-$1.10 per share on revenue of $2.60-to-$2.70 billion. The guidance includes total interest costs of around $220 million, while diluted share count for the quarter is expected to be 266 million, equivalent to 290 million shares on a full-quarter basis. Although Western Digital Corp (NASDAQ:WDC) shares have fallen by 25% year-to-date, shareholders hope management can unlock enough synergies from the merger to turn the stock around.
Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proven that they have great stock picking abilities. We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insight into how the brightest minds in the finance industry feel about specific stocks. After all, these people have access to smart analysts and expensive data/information sources that individual investors can’t match. So should one consider investing in Western Digital Corp. (NASDAQ:WDC)? The smart money sentiment can provide an answer to this question.
Western Digital Corp. (NASDAQ:WDC) was in 42 hedge funds’ portfolios at the end of the first quarter of 2016. WDC shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. There were 37 hedge funds in our database with WDC positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Franco-Nevada Corporation (NYSE:FNV), NASDAQ OMX Group, Inc. (NASDAQ:NDAQ), and Federal Realty Investment Trust (NYSE:FRT) to gather more data points.
According to Insider Monkey’s hedge fund database, John Overdeck and David Siegel’s Two Sigma Advisors has the biggest position in Western Digital Corp. (NASDAQ:WDC), worth close to $130.2 million, accounting for 0.7% of its total 13F portfolio. On Two Sigma Advisors’ heels is D E Shaw, founded by David E. Shaw, holding an $89.2 million position; 0.2% of its 13F portfolio is allocated to the company. Remaining hedge funds and institutional investors that are bullish consist of Robert Rodriguez and Steven Romick’s First Pacific Advisors LLC, John Brennan’s Sirios Capital Management, and Curtis Macnguyen’s Ivory Capital.
On the next page we’ll look at some funds that took up positions in Western Digital during Q1, as well as compare the stock to a handful of others with similar market caps.