WL Ross Holding Corp (WLRHU): Are Hedge Funds Right About This Stock?

The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on WL Ross Holding Corp (NASDAQ:WLRHU) in order to identify whether reputable and successful top money managers continue to believe in its potential.

WL Ross Holding Corp (NASDAQ:WLRHU) was in 19 hedge funds’ portfolios at the end of September. WLRHU shareholders have witnessed a slight increase in support from the world’s most elite money managers in recent months. There were 18 hedge funds in our database with WLRHU holdings 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 Star Bulk Carriers Corp. (NASDAQ:SBLK), Ennis, Inc. (NYSE:EBF), and Ardelyx Inc (NASDAQ:ARDX) to gather more data points.

In today’s marketplace there are numerous metrics shareholders employ to assess stocks. A duo of the less utilized metrics are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the top fund managers can outclass the S&P 500 by a solid amount (see the details here).

Keeping this in mind, let’s take a gander at the fresh action surrounding WL Ross Holding Corp (NASDAQ:WLRHU).

What does the smart money think about WL Ross Holding Corp (NASDAQ:WLRHU)?

Heading into Q4, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 6% from the second quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Amici Capital, managed by Paul Orlin and Alex Porter, holds the most valuable position in WL Ross Holding Corp (NASDAQ:WLRHU). Amici Capital has a $40.6 million position in the stock, comprising 1.9% of its 13F portfolio. Sitting at the No. 2 spot is Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital, with a $25.7 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors that are bullish consist of Clint Carlson’s Carlson Capital and Howard Guberman’s Gruss Asset Management.

As one would reasonably expect, specific money managers were leading the bulls’ herd. Canyon Capital Advisors, managed by Joshua Friedman and Mitchell Julis, created the most outsized call position in WL Ross Holding Corp (NASDAQ:WLRHU). Canyon Capital Advisors had $3.2 million invested in the company at the end of the quarter. Ira Unschuld’s Brant Point Investment Management also initiated a $0.2 million position during the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as WL Ross Holding Corp (NASDAQ:WLRHU) but similarly valued. These stocks are Star Bulk Carriers Corp. (NASDAQ:SBLK), Ennis, Inc. (NYSE:EBF), Ardelyx Inc (NASDAQ:ARDX), and Altisource Portfolio Solutions S.A. (NASDAQ:ASPS). All of these stocks’ market caps are closest to WLRHU’s market cap.

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $109 million in WLRHU’s case. Ennis, Inc. (NYSE:EBF) is the most popular stock in this table, while Star Bulk Carriers Corp. (NASDAQ:SBLK) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks WL Ross Holding Corp (NASDAQ:WLRHU) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.