Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Is WisdomTree Investments, Inc. (NASDAQ:WETF) a cheap investment right now? Investors who are in the know are buying. The number of bullish hedge fund bets advanced by 2 in recent months. Our calculations also showed that wetf isn’t among the 30 most popular stocks among hedge funds.
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 has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (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 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s view the recent hedge fund action regarding WisdomTree Investments, Inc. (NASDAQ:WETF).
How are hedge funds trading WisdomTree Investments, Inc. (NASDAQ:WETF)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 20% from the previous quarter. By comparison, 14 hedge funds held shares or bullish call options in WETF heading into this year. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in WisdomTree Investments, Inc. (NASDAQ:WETF), which was worth $27.7 million at the end of the third quarter. On the second spot was Millennium Management which amassed $13.2 million worth of shares. Moreover, Fisher Asset Management, Balyasny Asset Management, and PEAK6 Capital Management were also bullish on WisdomTree Investments, Inc. (NASDAQ:WETF), allocating a large percentage of their portfolios to this stock.
Now, key money managers were leading the bulls’ herd. Millennium Management, managed by Israel Englander, established the largest position in WisdomTree Investments, Inc. (NASDAQ:WETF). Millennium Management had $13.2 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also initiated a $6.4 million position during the quarter. The following funds were also among the new WETF investors: George Hall’s Clinton Group, Jim Simons’s Renaissance Technologies, and Andrew Feldstein and Stephen Siderow’s Blue Mountain Capital.
Let’s also examine hedge fund activity in other stocks similar to WisdomTree Investments, Inc. (NASDAQ:WETF). We will take a look at Benefitfocus Inc (NASDAQ:BNFT), Cryolife Inc (NYSE:CRY), Freshpet Inc (NASDAQ:FRPT), and FTS International, Inc. (NYSE:FTSI). This group of stocks’ market valuations are closest to WETF’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BNFT | 12 | 68918 | 1 |
| CRY | 8 | 34596 | -1 |
| FRPT | 13 | 39227 | -2 |
| FTSI | 21 | 128202 | 3 |
| Average | 13.5 | 67736 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $70 million in WETF’s case. FTS International, Inc. (NYSE:FTSI) is the most popular stock in this table. On the other hand Cryolife Inc (NYSE:CRY) is the least popular one with only 8 bullish hedge fund positions. WisdomTree Investments, Inc. (NASDAQ:WETF) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FTSI might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
