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Do Hedge Funds Love Walmart Inc. (WMT)?

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Walmart Inc. (NYSE:WMT) in this article.

Hedge fund interest in Walmart Inc. (NYSE:WMT) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare WMT to other stocks including Nestle SA (OTCMKTS:NSRGY), The Procter & Gamble Company (NYSE:PG), and Exxon Mobil Corporation (NYSE:XOM) to get a better sense of its popularity.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are a multitude of methods shareholders put to use to appraise their holdings. Two of the best methods are hedge fund and insider trading signals. We have shown that, historically, those who follow the top picks of the elite money managers can outpace the market by a solid margin (see the details here).

Ken Heebner of Capital Growth Management

Ken Heebner of Capital Growth Management

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the recent hedge fund action surrounding Walmart Inc. (NYSE:WMT).

Hedge fund activity in Walmart Inc. (NYSE:WMT)

At Q3’s end, a total of 56 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the previous quarter. By comparison, 60 hedge funds held shares or bullish call options in WMT a year ago. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

WMT_nov2019

More specifically, Bill & Melinda Gates Foundation Trust was the largest shareholder of Walmart Inc. (NYSE:WMT), with a stake worth $1377 million reported as of the end of September. Trailing Bill & Melinda Gates Foundation Trust was Fisher Asset Management, which amassed a stake valued at $1295.2 million. Renaissance Technologies, AQR Capital Management, and D E Shaw 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 Gabalex Capital allocated the biggest weight to Walmart Inc. (NYSE:WMT), around 8% of its portfolio. Bill & Melinda Gates Foundation Trust is also relatively very bullish on the stock, dishing out 6.49 percent of its 13F equity portfolio to WMT.

Since Walmart Inc. (NYSE:WMT) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there were a few hedge funds that elected to cut their entire stakes last quarter. Intriguingly, Brandon Haley’s Holocene Advisors sold off the biggest stake of the 750 funds followed by Insider Monkey, worth an estimated $45.5 million in stock, and Michael Kharitonov and Jon David McAuliffe’s Voleon Capital was right behind this move, as the fund dumped about $33.1 million worth. These bearish behaviors are interesting, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Walmart Inc. (NYSE:WMT) but similarly valued. These stocks are Nestle SA (OTCMKTS:NSRGY), The Procter & Gamble Company (NYSE:PG), Exxon Mobil Corporation (NYSE:XOM), and AT&T Inc. (NYSE:T). This group of stocks’ market caps match WMT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NSRGY 4 1831756 0
PG 66 11536685 8
XOM 48 1365038 -2
T 46 1515476 4
Average 41 4062239 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 41 hedge funds with bullish positions and the average amount invested in these stocks was $4062 million. That figure was $5584 million in WMT’s case. The Procter & Gamble Company (NYSE:PG) is the most popular stock in this table. On the other hand Nestle SA (OTCMKTS:NSRGY) is the least popular one with only 4 bullish hedge fund positions. Walmart Inc. (NYSE:WMT) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately WMT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WMT were disappointed as the stock returned 0.3% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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

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