Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged during the first quarter. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 40% and 25% respectively. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 18.7% during the first 5 months of 2019 and outperformed the broader market benchmark by 6.6 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.
Is World Wrestling Entertainment, Inc. (NYSE:WWE) a splendid investment now? Money managers are taking an optimistic view. The number of bullish hedge fund positions increased by 13 recently. Our calculations also showed that wwe isn’t among the 30 most popular stocks among hedge funds. WWE was in 47 hedge funds’ portfolios at the end of March. There were 34 hedge funds in our database with WWE holdings at the end of the previous quarter.
If you’d ask most investors, hedge funds are assumed to be slow, old investment vehicles of years past. While there are over 8000 funds trading at present, Our experts hone in on the leaders of this club, approximately 750 funds. These money managers command most of all hedge funds’ total capital, and by observing their matchless stock picks, Insider Monkey has figured out a number of investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship hedge fund strategy exceeded the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We’re going to go over the new hedge fund action surrounding World Wrestling Entertainment, Inc. (NYSE:WWE).
How are hedge funds trading World Wrestling Entertainment, Inc. (NYSE:WWE)?
At Q1’s end, a total of 47 of the hedge funds tracked by Insider Monkey were long this stock, a change of 38% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in WWE a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Renaissance Technologies, managed by Jim Simons, holds the number one position in World Wrestling Entertainment, Inc. (NYSE:WWE). Renaissance Technologies has a $248.6 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Citadel Investment Group, managed by Ken Griffin, which holds a $145.7 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism contain Robert Boucai’s Newbrook Capital Advisors, John Overdeck and David Siegel’s Two Sigma Advisors and Robert Pohly’s Samlyn Capital.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, established the largest position in World Wrestling Entertainment, Inc. (NYSE:WWE). Citadel Investment Group had $182.8 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $102.9 million position during the quarter. The other funds with new positions in the stock are Robert Boucai’s Newbrook Capital Advisors, John M. Angelo and Michael L. Gordon’s Angelo Gordon & Co, and Sander Gerber’s Hudson Bay Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as World Wrestling Entertainment, Inc. (NYSE:WWE) but similarly valued. We will take a look at Grupo Televisa SAB (NYSE:TV), American Homes 4 Rent (NYSE:AMH), Proofpoint Inc (NASDAQ:PFPT), and Dr. Reddy’s Laboratories Limited (NYSE:RDY). This group of stocks’ market valuations resemble WWE’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.75 hedge funds with bullish positions and the average amount invested in these stocks was $526 million. That figure was $1022 million in WWE’s case. Proofpoint Inc (NASDAQ:PFPT) is the most popular stock in this table. On the other hand Dr. Reddy’s Laboratories Limited (NYSE:RDY) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks World Wrestling Entertainment, Inc. (NYSE:WWE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately WWE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WWE were disappointed as the stock returned -16.5% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.