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Hedge Funds Are Selling WesBanco, Inc. (WSBC)

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. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards WesBanco, Inc. (NASDAQ:WSBC).

WesBanco, Inc. (NASDAQ:WSBC) has seen a decrease in hedge fund sentiment recently. Our calculations also showed that WSBC 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.

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’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Matthew Lindenbaum Basswood Capital

Matthew Lindenbaum of Basswood Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the new hedge fund action regarding WesBanco, Inc. (NASDAQ:WSBC).

How are hedge funds trading WesBanco, Inc. (NASDAQ:WSBC)?

At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -18% from one quarter earlier. On the other hand, there were a total of 8 hedge funds with a bullish position in WSBC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Renaissance Technologies held the most valuable stake in WesBanco, Inc. (NASDAQ:WSBC), which was worth $21 million at the end of the third quarter. On the second spot was Basswood Capital which amassed $5.3 million worth of shares. Millennium Management, Two Sigma Advisors, and Citadel Investment Group 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 Basswood Capital allocated the biggest weight to WesBanco, Inc. (NASDAQ:WSBC), around 0.62% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to WSBC.

Seeing as WesBanco, Inc. (NASDAQ:WSBC) has experienced a decline in interest from the aggregate hedge fund industry, logic holds that there were a few hedge funds who were dropping their full holdings by the end of the first quarter. Interestingly, Thomas Bailard’s Bailard Inc dropped the biggest position of the “upper crust” of funds tracked by Insider Monkey, valued at close to $0.5 million in stock, and Cliff Asness’s AQR Capital Management was right behind this move, as the fund sold off about $0.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 2 funds by the end of the first quarter.

Let’s now take a look at hedge fund activity in other stocks similar to WesBanco, Inc. (NASDAQ:WSBC). These stocks are Noah Holdings Limited (NYSE:NOAH), Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD), Focus Financial Partners Inc. (NASDAQ:FOCS), and WestAmerica Bancorp. (NASDAQ:WABC). All of these stocks’ market caps are closest to WSBC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NOAH 14 320880 -1
IRWD 28 334818 0
FOCS 7 34941 -5
WABC 8 8181 -3
Average 14.25 174705 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $175 million. That figure was $32 million in WSBC’s case. Ironwood Pharmaceuticals, Inc. (NASDAQ:IRWD) is the most popular stock in this table. On the other hand Focus Financial Partners Inc. (NASDAQ:FOCS) is the least popular one with only 7 bullish hedge fund positions. WesBanco, Inc. (NASDAQ:WSBC) 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. 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 and surpassed the market by 15.9 percentage points. Unfortunately WSBC wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); WSBC investors were disappointed as the stock returned -12.1% during the second quarter 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.