The third-quarter stock market correction has turned out to resemble the situation observed during the Asian financial crisis of 1997. The two relatively short-lived corrections occurred at a time with stable interest rates, falling commodity markets, with strong-performing technology and healthcare sectors, and struggling energy sector. Similarly, the two corrections followed long periods without a correction, which had to come sooner or later and it did. Even so, several prominent hedge fund investors publicly asserted their bearish view on the current state of the U.S. equity markets, suggesting that they significantly cut their exposure to equities during the latest quarter. Having said that, it would be worthwhile to take a look at the hedge fund sentiment on Wintrust Financial Corp (NASDAQ:WTFC) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Is Wintrust Financial Corp (NASDAQ:WTFC) a buy right now? Investors who are in the know are turning less bullish. The number of bullish hedge fund bets went down by 2 lately. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article, we will examine companies such as Infinera Corp. (NASDAQ:INFN), Clean Harbors Inc (NYSE:CLH), and World Fuel Services Corporation (NYSE:INT) to gather more data points.
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Keeping this in mind, let’s analyze the recent action regarding Wintrust Financial Corp (NASDAQ:WTFC).
How are hedge funds trading Wintrust Financial Corp (NASDAQ:WTFC)?
At the end of Q3, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, a drop of 15% from the previous quarter. With the smart money’s sentiment swirling, there exists an “upper tier” of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ken Fisher’s Fisher Asset Management has the largest position in Wintrust Financial Corp (NASDAQ:WTFC), worth close to $70.3 million, amounting to 0.1% of its total 13F portfolio. On Fisher Asset Management’s heels is Ken Griffin of Citadel Investment Group, with a $31 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other peers that hold long positions contain Anand Parekh’s Alyeska Investment Group, Israel Englander’s Millennium Management and David Dreman’s Dreman Value Management.
Because Wintrust Financial Corp (NASDAQ:WTFC) has faced a declining sentiment from the smart money, logic holds that there is a sect of hedgies who sold off their entire stakes in the third quarter. It’s worth mentioning that Millennium Management Subsidiary’s Decade Capital Management dumped the largest stake of the “upper crust” of funds followed by Insider Monkey, valued at an estimated $6.4 million in stock, and Renaissance Technologies was right behind this move, as the fund cut about $3.2 million worth of shares. These transactions are important to note, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Wintrust Financial Corp (NASDAQ:WTFC). We will take a look at Infinera Corp. (NASDAQ:INFN), Clean Harbors Inc (NYSE:CLH), World Fuel Services Corporation (NYSE:INT), and Myriad Genetics, Inc. (NASDAQ:MYGN). All of these stocks’ market caps match Wintrust Financial Corp (NASDAQ:WTFC)’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see, these stocks had an average of 24 hedge funds with bullish positions and the average amount invested in these stocks was $346 million. That figure was $182 million in Wintrust Financial Corp (NASDAQ:WTFC)’s case. Infinera Corp. (NASDAQ:INFN) is the most popular stock in this table. On the other hand, Myriad Genetics, Inc. (NASDAQ:MYGN) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks, Wintrust Financial Corp (NASDAQ:WTFC) is even less popular than Myriad Genetics, Inc. (NASDAQ:MYGN). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case, more research is warranted.