The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 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 June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Watts Water Technologies Inc (NYSE:WTS) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Watts Water Technologies Inc (NYSE:WTS) the right investment to pursue these days? Investors who are in the know were in a bullish mood. The number of bullish hedge fund bets rose by 6 in recent months. Watts Water Technologies Inc (NYSE:WTS) was in 25 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 24. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WTS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 19 hedge funds in our database with WTS holdings at the end of March.
Video: Watch our video about the top 5 most popular hedge fund stocks.
At the moment there are dozens of signals shareholders employ to value stocks. A couple of the most innovative signals are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the best picks of the top hedge fund managers can outpace the market by a significant margin (see the details here).
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website to get excerpts of these letters in your inbox. Now we’re going to go over the new hedge fund action encompassing Watts Water Technologies Inc (NYSE:WTS).
How are hedge funds trading Watts Water Technologies Inc (NYSE:WTS)?
At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WTS over the last 20 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).
More specifically, Impax Asset Management was the largest shareholder of Watts Water Technologies Inc (NYSE:WTS), with a stake worth $112.4 million reported as of the end of September. Trailing Impax Asset Management was GAMCO Investors, which amassed a stake valued at $68.2 million. Renaissance Technologies, GLG Partners, and Royce & Associates 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 Impax Asset Management allocated the biggest weight to Watts Water Technologies Inc (NYSE:WTS), around 1.15% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.78 percent of its 13F equity portfolio to WTS.
With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the largest position in Watts Water Technologies Inc (NYSE:WTS). Arrowstreet Capital had $4 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $3.8 million position during the quarter. The other funds with new positions in the stock are Michael Gelband’s ExodusPoint Capital, Paul Tudor Jones’s Tudor Investment Corp, and Dmitry Balyasny’s Balyasny Asset Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Watts Water Technologies Inc (NYSE:WTS) but similarly valued. These stocks are LiveRamp Holdings, Inc. (NYSE:RAMP), Plug Power, Inc. (NASDAQ:PLUG), John Bean Technologies Corporation (NYSE:JBT), Advanced Disposal Services, Inc. (NYSE:ADSW), BlackBerry Limited (NYSE:BB), FireEye Inc (NASDAQ:FEYE), and National Health Investors Inc (NYSE:NHI). This group of stocks’ market valuations match WTS’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 21.6 hedge funds with bullish positions and the average amount invested in these stocks was $280 million. That figure was $250 million in WTS’s case. FireEye Inc (NASDAQ:FEYE) is the most popular stock in this table. On the other hand National Health Investors Inc (NYSE:NHI) is the least popular one with only 15 bullish hedge fund positions. Watts Water Technologies Inc (NYSE:WTS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WTS is 78.5. 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 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 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Hedge funds were also right about betting on WTS as the stock returned 20.1% during Q3 (through September 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.