Do Hedge Funds Love West Pharmaceutical Services Inc. (WST)?

In this article we will take a look at whether hedge funds think West Pharmaceutical Services Inc. (NYSE:WST) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

West Pharmaceutical Services Inc. (NYSE:WST) investors should be aware of a decrease in hedge fund interest of late. West Pharmaceutical Services Inc. (NYSE:WST) was in 26 hedge funds’ portfolios at the end of March. The all time high for this statistic is 41. There were 34 hedge funds in our database with WST positions at the end of the fourth quarter. Our calculations also showed that WST isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. 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 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.


Ken Fisher of Fisher Asset Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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. You can subscribe to our free daily newsletter on our homepage. Now let’s go over the fresh hedge fund action surrounding West Pharmaceutical Services Inc. (NYSE:WST).

Do Hedge Funds Think WST Is A Good Stock To Buy Now?

At first quarter’s end, a total of 26 of the hedge funds tracked by Insider Monkey were long this stock, a change of -24% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WST over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Arrowstreet Capital was the largest shareholder of West Pharmaceutical Services Inc. (NYSE:WST), with a stake worth $106.6 million reported as of the end of March. Trailing Arrowstreet Capital was Fisher Asset Management, which amassed a stake valued at $87 million. Intermede Investment Partners, AQR Capital Management, and Millennium Management 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 0 allocated the biggest weight to West Pharmaceutical Services Inc. (NYSE:WST), around 1.64% of its 13F portfolio. 0 is also relatively very bullish on the stock, designating 1.06 percent of its 13F equity portfolio to WST.

Since West Pharmaceutical Services Inc. (NYSE:WST) has experienced declining sentiment from hedge fund managers, logic holds that there lies a certain “tier” of fund managers who were dropping their full holdings heading into Q2. It’s worth mentioning that Renaissance Technologies sold off the largest stake of all the hedgies monitored by Insider Monkey, worth about $12.5 million in stock, and Michael Rockefeller and KarláKroeker’s Woodline Partners was right behind this move, as the fund said goodbye to about $9.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 8 funds heading into Q2.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as West Pharmaceutical Services Inc. (NYSE:WST) but similarly valued. We will take a look at Lyft, Inc. (NASDAQ:LYFT), Ameren Corporation (NYSE:AEE), Energy Transfer L.P. (NYSE:ET), Qorvo Inc (NASDAQ:QRVO), ORIX Corporation (NYSE:IX), Horizon Therapeutics Public Limited Company (NASDAQ:HZNP), and Ingersoll Rand Inc. (NYSE:IR). This group of stocks’ market valuations resemble WST’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LYFT 60 1954603 8
AEE 19 266021 0
ET 25 647725 0
QRVO 41 2329699 -10
IX 5 4886 2
HZNP 48 4177404 -7
IR 35 789022 1
Average 33.3 1452766 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.3 hedge funds with bullish positions and the average amount invested in these stocks was $1453 million. That figure was $419 million in WST’s case. Lyft, Inc. (NASDAQ:LYFT) is the most popular stock in this table. On the other hand ORIX Corporation (NYSE:IX) is the least popular one with only 5 bullish hedge fund positions. West Pharmaceutical Services Inc. (NYSE:WST) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WST is 35.1. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. A small number of hedge funds were also right about betting on WST as the stock returned 32.9% since the end of the first quarter (through 7/9) and outperformed the market by an even larger margin.

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