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Hedge Funds Are Dumping Winnebago Industries, Inc. (WGO)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Winnebago Industries, Inc. (NYSE:WGO) based on those filings.

Winnebago Industries, Inc. (NYSE:WGO) has experienced a decrease in support from the world’s most elite money managers of late. WGO was in 19 hedge funds’ portfolios at the end of March. There were 23 hedge funds in our database with WGO holdings at the end of the previous quarter. Our calculations also showed that WGO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David E. Shaw of D.E. Shaw

David E. Shaw of D.E. Shaw

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to analyze the new hedge fund action surrounding Winnebago Industries, Inc. (NYSE:WGO).

How are hedge funds trading Winnebago Industries, Inc. (NYSE:WGO)?

At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the fourth quarter of 2019. By comparison, 15 hedge funds held shares or bullish call options in WGO a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

Among these funds, Punch Card Capital held the most valuable stake in Winnebago Industries, Inc. (NYSE:WGO), which was worth $66.3 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $12.8 million worth of shares. Millennium Management, Intrinsic Edge Capital, and Shellback Capital 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 Punch Card Capital allocated the biggest weight to Winnebago Industries, Inc. (NYSE:WGO), around 33.44% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, earmarking 1.5 percent of its 13F equity portfolio to WGO.

Judging by the fact that Winnebago Industries, Inc. (NYSE:WGO) has experienced a decline in interest from hedge fund managers, logic holds that there lies a certain “tier” of money managers that decided to sell off their entire stakes by the end of the first quarter. It’s worth mentioning that Jack Woodruff’s Candlestick Capital Management dumped the biggest position of all the hedgies watched by Insider Monkey, comprising an estimated $16.7 million in stock. Brad Dunkley and Blair Levinsky’s fund, Waratah Capital Advisors, also said goodbye to its stock, about $7.8 million worth. These moves are interesting, as total hedge fund interest was cut by 4 funds by the end of the first quarter.

Let’s check out hedge fund activity in other stocks similar to Winnebago Industries, Inc. (NYSE:WGO). We will take a look at CareDx, Inc. (NASDAQ:CDNA), Cardlytics, Inc. (NASDAQ:CDLX), Standard Motor Products, Inc. (NYSE:SMP), and First Busey Corporation (NASDAQ:BUSE). All of these stocks’ market caps are similar to WGO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CDNA 17 144703 -8
CDLX 26 292046 0
SMP 9 68050 -1
BUSE 11 27678 -1
Average 15.75 133119 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.75 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $132 million in WGO’s case. Cardlytics, Inc. (NASDAQ:CDLX) is the most popular stock in this table. On the other hand Standard Motor Products, Inc. (NYSE:SMP) is the least popular one with only 9 bullish hedge fund positions. Winnebago Industries, Inc. (NYSE:WGO) is not the most popular stock in this group but hedge fund interest is still above average. 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 13.4% in 2020 through June 22nd but still beat the market by 15.9 percentage points. Hedge funds were also right about betting on WGO as the stock returned 155.9% in Q2 (through June 22nd) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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