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Hedge Funds Have Never Been This Bullish On Worldpay, Inc. (WP)

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 28, so let’s proceed with the discussion of the hedge fund sentiment on Worldpay, Inc. (NYSE:WP).

Worldpay, Inc. (NYSE:WP) investors should be aware of an increase in activity from the world’s largest hedge funds lately. Our calculations also showed that WP is among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Ric Dillon Diamond Hill Capital

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a gander at the fresh hedge fund action regarding Worldpay, Inc. (NYSE:WP).

Hedge fund activity in Worldpay, Inc. (NYSE:WP)

At Q2’s end, a total of 84 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from one quarter earlier. By comparison, 46 hedge funds held shares or bullish call options in WP 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.

WP_oct2019

The largest stake in Worldpay, Inc. (NYSE:WP) was held by Millennium Management, which reported holding $428.8 million worth of stock at the end of March. It was followed by Melvin Capital Management with a $376.9 million position. Other investors bullish on the company included Select Equity Group, Diamond Hill Capital, and Citadel Investment Group.

As one would reasonably expect, some big names were leading the bulls’ herd. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, initiated the most outsized position in Worldpay, Inc. (NYSE:WP). Senator Investment Group had $218.1 million invested in the company at the end of the quarter. Daniel Sundheim’s D1 Capital Partners also made a $144.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Florian Kronawitter’s White Square Capital, John Overdeck and David Siegel’s Two Sigma Advisors, and Seth Wunder’s Black-and-White Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Worldpay, Inc. (NYSE:WP) but similarly valued. These stocks are Roper Technologies, Inc. (NYSE:ROP), Edwards Lifesciences Corporation (NYSE:EW), Delta Air Lines, Inc. (NYSE:DAL), and Constellation Brands, Inc. (NYSE:STZ). This group of stocks’ market caps are closest to WP’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ROP 35 944295 13
EW 33 873482 8
DAL 70 7271037 10
STZ 38 1438593 0
Average 44 2631852 7.75

As you can see these stocks had an average of 44 hedge funds with bullish positions and the average amount invested in these stocks was $2632 million. That figure was $5780 million in WP’s case. Delta Air Lines, Inc. (NYSE:DAL) is the most popular stock in this table. On the other hand Edwards Lifesciences Corporation (NYSE:EW) is the least popular one with only 33 bullish hedge fund positions. Compared to these stocks Worldpay, Inc. (NYSE:WP) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on WP as the stock returned 10.2% during Q3 before being taken over and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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