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 September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded The Western Union Company (NYSE:WU) based on those filings.
Is The Western Union Company (NYSE:WU) the right pick for your portfolio? Hedge funds were getting more optimistic. The number of long hedge fund positions improved by 2 recently. The Western Union Company (NYSE:WU) was in 36 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WU isn’t among the 30 most popular stocks among hedge funds (click for Q3 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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
Dmitry Balyasny of Balyasny Asset Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. Now we’re going to check out the recent hedge fund action surrounding The Western Union Company (NYSE:WU).
Do Hedge Funds Think WU Is A Good Stock To Buy Now?
At Q3’s end, a total of 36 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WU over the last 21 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
The largest stake in The Western Union Company (NYSE:WU) was held by Citadel Investment Group, which reported holding $298.5 million worth of stock at the end of September. It was followed by D E Shaw with a $81 million position. Other investors bullish on the company included International Value Advisers, AQR Capital Management, and Arrowstreet Capital. In terms of the portfolio weights assigned to each position International Value Advisers allocated the biggest weight to The Western Union Company (NYSE:WU), around 7.76% of its 13F portfolio. One Fin Capital Management is also relatively very bullish on the stock, setting aside 6.04 percent of its 13F equity portfolio to WU.
As aggregate interest increased, some big names have jumped into The Western Union Company (NYSE:WU) headfirst. One Fin Capital Management, managed by David MacKnight, created the most outsized position in The Western Union Company (NYSE:WU). One Fin Capital Management had $9.4 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $4.8 million investment in the stock during the quarter. The following funds were also among the new WU investors: Parvinder Thiara’s Athanor Capital, Minhua Zhang’s Weld Capital Management, and Hoon Kim’s Quantinno Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as The Western Union Company (NYSE:WU) but similarly valued. These stocks are Imperial Oil Limited (NYSE:IMO), Anaplan, Inc. (NYSE:PLAN), ASE Technology Holding Co., Ltd. (NYSE:ASX), RenaissanceRe Holdings Ltd. (NYSE:RNR), Paylocity Holding Corp (NASDAQ:PCTY), Concho Resources Inc. (NYSE:CXO), and Guidewire Software Inc (NYSE:GWRE). This group of stocks’ market values are closest to WU’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| IMO | 11 | 28115 | 0 |
| PLAN | 55 | 3198745 | 6 |
| ASX | 11 | 131886 | 0 |
| RNR | 37 | 806129 | -4 |
| PCTY | 27 | 505551 | 3 |
| CXO | 47 | 731966 | 3 |
| GWRE | 34 | 1087613 | 5 |
| Average | 31.7 | 927144 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $927 million. That figure was $669 million in WU’s case. Anaplan, Inc. (NYSE:PLAN) is the most popular stock in this table. On the other hand Imperial Oil Limited (NYSE:IMO) is the least popular one with only 11 bullish hedge fund positions. The Western Union Company (NYSE:WU) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WU is 65.4. 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 positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately WU wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WU were disappointed as the stock returned 7.3% since the end of September (through 12/18) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
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Disclosure: None. This article was originally published at Insider Monkey.
