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Did Hedge Funds Make The Right Call On Whirlpool Corporation (WHR)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Whirlpool Corporation (NYSE:WHR) and determine whether the smart money was really smart about this stock.

Whirlpool Corporation (NYSE:WHR) investors should be aware of a decrease in hedge fund interest lately. Our calculations also showed that WHR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Millennium Management, Catapult Capital Management

Israel Englander of Millennium Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so if you have any good ideas send us an email. Keeping this in mind let’s take a glance at the fresh hedge fund action regarding Whirlpool Corporation (NYSE:WHR).

What does smart money think about Whirlpool Corporation (NYSE:WHR)?

At the end of the first quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards WHR over the last 18 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Is WHR A Good Stock To Buy?

More specifically, Greenhaven Associates was the largest shareholder of Whirlpool Corporation (NYSE:WHR), with a stake worth $236.9 million reported as of the end of September. Trailing Greenhaven Associates was Lyrical Asset Management, which amassed a stake valued at $138.8 million. AQR Capital Management, Arrowstreet Capital, and Marshall Wace LLP were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Greenhaven Associates allocated the biggest weight to Whirlpool Corporation (NYSE:WHR), around 8.81% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, earmarking 3.41 percent of its 13F equity portfolio to WHR.

Due to the fact that Whirlpool Corporation (NYSE:WHR) has witnessed declining sentiment from the smart money, it’s easy to see that there was a specific group of fund managers that elected to cut their positions entirely by the end of the first quarter. Interestingly, Renaissance Technologies dumped the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $13.2 million in stock. David Harding’s fund, Winton Capital Management, also said goodbye to its stock, about $5.1 million worth. These moves are interesting, as total hedge fund interest fell by 3 funds by the end of the first quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Whirlpool Corporation (NYSE:WHR) but similarly valued. We will take a look at Voya Financial Inc (NYSE:VOYA), Ascendis Pharma A/S (NASDAQ:ASND), Douglas Emmett, Inc. (NYSE:DEI), and China Southern Airlines Co Ltd (NYSE:ZNH). This group of stocks’ market values match WHR’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VOYA 32 617032 -11
ASND 33 2201133 -5
DEI 22 526330 3
ZNH 2 7964 -1
Average 22.25 838115 -3.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $838 million. That figure was $567 million in WHR’s case. Ascendis Pharma A/S (NASDAQ:ASND) is the most popular stock in this table. On the other hand China Southern Airlines Co Ltd (NYSE:ZNH) is the least popular one with only 2 bullish hedge fund positions. Whirlpool Corporation (NYSE:WHR) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but still beat the market by 15.5 percentage points. Hedge funds were also right about betting on WHR as the stock returned 52.7% in Q2 and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.