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Did Hedge Funds Make The Right Call On WillScot Corporation (WSC) ?

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 WillScot Corporation (NASDAQ:WSC) and determine whether the smart money was really smart about this stock.

WillScot Corporation (NASDAQ:WSC) shares haven’t seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 28 hedge funds’ portfolios at the end of March. At the end of this article we will also compare WSC to other stocks including Installed Building Products Inc (NYSE:IBP), Essential Properties Realty Trust, Inc. (NYSE:EPRT), and Global Net Lease, Inc. (NYSE:GNL) to get a better sense of its popularity.

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

In the eyes of most shareholders, hedge funds are viewed as unimportant, outdated investment tools of the past. While there are more than 8000 funds with their doors open today, Our researchers choose to focus on the leaders of this group, around 850 funds. Most estimates calculate that this group of people orchestrate bulk of the hedge fund industry’s total capital, and by watching their top equity investments, Insider Monkey has formulated many investment strategies that have historically outrun the market. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

David Harding

David Harding of Winton Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to analyze the fresh hedge fund action encompassing WillScot Corporation (NASDAQ:WSC).

How are hedge funds trading WillScot Corporation (NASDAQ:WSC)?

At Q1’s end, a total of 28 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards WSC over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

Is WSC A Good Stock To Buy?

Among these funds, Broad Bay Capital held the most valuable stake in WillScot Corporation (NASDAQ:WSC), which was worth $27.8 million at the end of the third quarter. On the second spot was Bayberry Capital Partners which amassed $27.2 million worth of shares. Rubric Capital Management, Chescapmanager LLC, and Dendur Capital 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 Bayberry Capital Partners allocated the biggest weight to WillScot Corporation (NASDAQ:WSC), around 11.08% of its 13F portfolio. Dendur Capital is also relatively very bullish on the stock, designating 10.62 percent of its 13F equity portfolio to WSC.

Due to the fact that WillScot Corporation (NASDAQ:WSC) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there exists a select few hedgies that elected to cut their full holdings heading into Q4. Interestingly, Bernard Selz’s Selz Capital dumped the biggest investment of the 750 funds monitored by Insider Monkey, totaling close to $25.8 million in stock. Phil Frohlich’s fund, Prescott Group Capital Management, also dumped its stock, about $1.4 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks similar to WillScot Corporation (NASDAQ:WSC). These stocks are Installed Building Products Inc (NYSE:IBP), Essential Properties Realty Trust, Inc. (NYSE:EPRT), Global Net Lease, Inc. (NYSE:GNL), and Regenxbio Inc (NASDAQ:RGNX). This group of stocks’ market valuations resemble WSC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IBP 21 86225 -3
EPRT 8 11280 -1
GNL 7 24660 -3
RGNX 19 185637 0
Average 13.75 76951 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $188 million in WSC’s case. Installed Building Products Inc (NYSE:IBP) is the most popular stock in this table. On the other hand Global Net Lease, Inc. (NYSE:GNL) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks WillScot Corporation (NASDAQ:WSC) is more popular among hedge funds. 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 managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on WSC, though not to the same extent, as the stock returned 21.3% in Q2 and outperformed the market as well.

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