Is Weight Watchers International, Inc. (NYSE:WTW) a sound investment today? Money managers are taking a bearish view. The number of long hedge fund positions dropped by 1 lately.
In the 21st century investor’s toolkit, there are a multitude of methods market participants can use to monitor the equity markets. A couple of the most underrated are hedge fund and insider trading activity. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top money managers can outclass the broader indices by a very impressive margin (see just how much).
Just as important, positive insider trading activity is a second way to parse down the marketplace. Just as you’d expect, there are plenty of reasons for a corporate insider to downsize shares of his or her company, but just one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the impressive potential of this tactic if investors understand what to do (learn more here).
Consequently, we’re going to take a look at the latest action surrounding Weight Watchers International, Inc. (NYSE:WTW).
What have hedge funds been doing with Weight Watchers International, Inc. (NYSE:WTW)?
At year’s end, a total of 13 of the hedge funds we track were long in this stock, a change of -7% from the third quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were upping their holdings meaningfully.
When looking at the hedgies we track, Martin Whitman’s Third Avenue Management had the biggest position in Weight Watchers International, Inc. (NYSE:WTW), worth close to $25 million, comprising 0.5% of its total 13F portfolio. Sitting at the No. 2 spot is Visium Asset Management, managed by Jacob Gottlieb, which held a $20 million position; the fund has 0.7% of its 13F portfolio invested in the stock. Some other peers with similar optimism include SAC Subsidiary’s CR Intrinsic Investors, Jim Simons’s Renaissance Technologies and D. E. Shaw’s D E Shaw.
Since Weight Watchers International, Inc. (NYSE:WTW) has faced bearish sentiment from the entirety of the hedge funds we track, it’s safe to say that there is a sect of hedge funds who were dropping their positions entirely heading into 2013. It’s worth mentioning that Malcolm Fairbairn’s Ascend Capital dumped the biggest investment of the “upper crust” of funds we key on, worth close to $8 million in stock.. Daniel Arbess’s fund, Xerion, also said goodbye to its stock, about $5 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds heading into 2013.
Insider trading activity in Weight Watchers International, Inc. (NYSE:WTW)
Bullish insider trading is particularly usable when the company we’re looking at has experienced transactions within the past six months. Over the last six-month time frame, Weight Watchers International, Inc. (NYSE:WTW) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Weight Watchers International, Inc. (NYSE:WTW). These stocks are Regis Corporation (NYSE:RGS), Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA), Service Corporation International (NYSE:SCI), VCA Antech Inc (NASDAQ:WOOF), and Bright Horizons Family Solutions Inc (NYSE:BFAM). This group of stocks are the members of the personal services industry and their market caps are similar to WTW’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Regis Corporation (NYSE:RGS)||11||4||0|
|Ulta Salon, Cosmetics & Fragrance, Inc. (NASDAQ:ULTA)||26||1||3|
|Service Corporation International (NYSE:SCI)||18||1||3|
|VCA Antech Inc (NASDAQ:WOOF)||17||0||2|
|Bright Horizons Family Solutions Inc (NYSE:BFAM)||4||0||0|
With the returns exhibited by our strategies, everyday investors should always pay attention to hedge fund and insider trading sentiment, and Weight Watchers International, Inc. (NYSE:WTW) shareholders fit into this picture quite nicely.
Insider Monkey’s small-cap strategy returned 37% between September 2012 and March 2013 versus 12.9% for the S&P 500 index. Try it now by clicking the link above.