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Hedge Funds Are Getting Bullish On Walmart Inc. (WMT)?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at 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. Stocks kept going up since then. In this article we look at how hedge funds traded Walmart Inc. (NYSE:WMT) and determine whether the smart money was really smart about this stock.

Walmart Inc. (NYSE:WMT) was in 60 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 71. WMT has seen an increase in hedge fund sentiment in recent months. There were 55 hedge funds in our database with WMT holdings at the end of March. Our calculations also showed that WMT 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).

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

To most shareholders, hedge funds are perceived as unimportant, outdated financial vehicles of years past. While there are over 8000 funds in operation at the moment, Our experts look at the moguls of this group, about 850 funds. Most estimates calculate that this group of people orchestrate the majority of all hedge funds’ total capital, and by monitoring their best investments, Insider Monkey has unsheathed various investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Currently, investors are pessimistic about commercial real estate investments. So, we are checking out this contrarian play to diversify our market exposure. We go through lists like the 10 most profitable companies in America 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. Now let’s check out the recent hedge fund action surrounding Walmart Inc. (NYSE:WMT).

What does smart money think about Walmart Inc. (NYSE:WMT)?

At Q2’s end, a total of 60 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 56 hedge funds with a bullish position in WMT a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Bill & Melinda Gates Foundation Trust held the most valuable stake in Walmart Inc. (NYSE:WMT), which was worth $1389.8 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $1322.7 million worth of shares. Renaissance Technologies, GQG Partners, and AQR Capital 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 Leonard Green & Partners allocated the biggest weight to Walmart Inc. (NYSE:WMT), around 11.17% of its 13F portfolio. Crake Asset Management is also relatively very bullish on the stock, designating 9.78 percent of its 13F equity portfolio to WMT.

With a general bullishness amongst the heavyweights, some big names have jumped into Walmart Inc. (NYSE:WMT) headfirst. GQG Partners, managed by Rajiv Jain, created the most outsized position in Walmart Inc. (NYSE:WMT). GQG Partners had $417.1 million invested in the company at the end of the quarter. Martin Taylor’s Crake Asset Management also initiated a $99.8 million position during the quarter. The following funds were also among the new WMT investors: Bo Shan’s Gobi Capital, Gregg Moskowitz’s Interval Partners, and Seth Wunder’s Black-and-White Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Walmart Inc. (NYSE:WMT). These stocks are Mastercard Incorporated (NYSE:MA), The Procter & Gamble Company (NYSE:PG), Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM), JPMorgan Chase & Co. (NYSE:JPM), UnitedHealth Group Inc. (NYSE:UNH), The Home Depot, Inc. (NYSE:HD), and Intel Corporation (NASDAQ:INTC). This group of stocks’ market caps are closest to WMT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MA 147 14350337 8
PG 73 9244143 -4
TSM 58 5209772 4
JPM 123 8732467 11
UNH 96 8326373 -8
HD 85 4642557 -2
INTC 78 6480425 5
Average 94.3 8140868 2

View table here if you experience formatting issues.

As you can see these stocks had an average of 94.3 hedge funds with bullish positions and the average amount invested in these stocks was $8141 million. That figure was $5829 million in WMT’s case. Mastercard Incorporated (NYSE:MA) is the most popular stock in this table. On the other hand Taiwan Semiconductor Mfg. Co. Ltd. (NYSE:TSM) is the least popular one with only 58 bullish hedge fund positions. Walmart Inc. (NYSE:WMT) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WMT is 36.5. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.2% in 2020 through August 24th and surpassed the market by 20.6 percentage points. Unfortunately WMT wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); WMT investors were disappointed as the stock returned 10.1% since Q2 and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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