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Hedge Funds Dipping Their Toes Into The Williams Companies, Inc. (WMB)

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 more than 750 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2019. In this article we are going to take a look at smart money sentiment towards The Williams Companies, Inc. (NYSE:WMB).

The Williams Companies, Inc. (NYSE:WMB) was in 36 hedge funds’ portfolios at the end of September. WMB investors should be aware of an increase in hedge fund sentiment lately. There were 34 hedge funds in our database with WMB positions at the end of the previous quarter. Our calculations also showed that WMB isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 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.

GLENVIEW CAPITAL

Larry Robbins of Glenview Capital

Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a look at the new hedge fund action surrounding The Williams Companies, Inc. (NYSE:WMB).

How are hedge funds trading The Williams Companies, Inc. (NYSE:WMB)?

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 second quarter of 2019. By comparison, 43 hedge funds held shares or bullish call options in WMB 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.

No of Hedge Funds with WMB Positions

Among these funds, Glenview Capital held the most valuable stake in The Williams Companies, Inc. (NYSE:WMB), which was worth $181.5 million at the end of the third quarter. On the second spot was Steadfast Capital Management which amassed $76.9 million worth of shares. Millennium Management, Levin Easterly Partners, and Canyon Capital Advisors 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 BP Capital allocated the biggest weight to The Williams Companies, Inc. (NYSE:WMB), around 6.49% of its portfolio. Sunriver Management is also relatively very bullish on the stock, designating 4.77 percent of its 13F equity portfolio to WMB.

Consequently, key hedge funds were breaking ground themselves. Levin Easterly Partners, managed by John Murphy, established the largest position in The Williams Companies, Inc. (NYSE:WMB). Levin Easterly Partners had $64.8 million invested in the company at the end of the quarter. Renaissance Technologies also made a $52.4 million investment in the stock during the quarter. The following funds were also among the new WMB investors: David E. Shaw’s D E Shaw, Minhua Zhang’s Weld Capital Management, and Charles Paquelet’s Skylands Capital.

Let’s now take a look at hedge fund activity in other stocks similar to The Williams Companies, Inc. (NYSE:WMB). We will take a look at Southwest Airlines Co. (NYSE:LUV), Electronic Arts Inc. (NASDAQ:EA), Amphenol Corporation (NYSE:APH), and Nutrien Ltd. (NYSE:NTR). This group of stocks’ market caps are similar to WMB’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LUV 36 3854849 3
EA 64 2089888 5
APH 31 758511 6
NTR 25 174521 3
Average 39 1719442 4.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $1719 million. That figure was $643 million in WMB’s case. Electronic Arts Inc. (NASDAQ:EA) is the most popular stock in this table. On the other hand Nutrien Ltd. (NYSE:NTR) is the least popular one with only 25 bullish hedge fund positions. The Williams Companies, Inc. (NYSE:WMB) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately WMB wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WMB investors were disappointed as the stock returned -5.6% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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

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