We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Worthington Industries, Inc. (NYSE:WOR).
Worthington Industries, Inc. (NYSE:WOR) investors should pay attention to an increase in enthusiasm from smart money in recent months. Our calculations also showed that WOR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the latest hedge fund action regarding Worthington Industries, Inc. (NYSE:WOR).
What does smart money think about Worthington Industries, Inc. (NYSE:WOR)?
Heading into the fourth quarter of 2019, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 69% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WOR over the last 17 quarters. With the smart money’s capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
More specifically, Royce & Associates was the largest shareholder of Worthington Industries, Inc. (NYSE:WOR), with a stake worth $19.6 million reported as of the end of September. Trailing Royce & Associates was Renaissance Technologies, which amassed a stake valued at $6.9 million. Fisher Asset Management, GLG Partners, and AQR Capital Management 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 AlphaOne Capital Partners allocated the biggest weight to Worthington Industries, Inc. (NYSE:WOR), around 0.44% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, designating 0.33 percent of its 13F equity portfolio to WOR.
With a general bullishness amongst the heavyweights, key money managers have jumped into Worthington Industries, Inc. (NYSE:WOR) headfirst. Renaissance Technologies, founded by Jim Simons, initiated the most valuable position in Worthington Industries, Inc. (NYSE:WOR). Renaissance Technologies had $6.9 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $3.3 million investment in the stock during the quarter. The following funds were also among the new WOR investors: David E. Shaw’s D E Shaw, Brandon Haley’s Holocene Advisors, and Paul Tudor Jones’s Tudor Investment Corp.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Worthington Industries, Inc. (NYSE:WOR) but similarly valued. These stocks are CommVault Systems, Inc. (NASDAQ:CVLT), Tellurian Inc. (NASDAQ:TELL), Cambrex Corporation (NYSE:CBM), and Kontoor Brands, Inc. (NYSE:KTB). This group of stocks’ market caps are similar to WOR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVLT | 24 | 296800 | 5 |
| TELL | 14 | 52629 | 5 |
| CBM | 17 | 153556 | 5 |
| KTB | 21 | 70588 | 8 |
| Average | 19 | 143393 | 5.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $143 million. That figure was $59 million in WOR’s case. CommVault Systems, Inc. (NASDAQ:CVLT) is the most popular stock in this table. On the other hand Tellurian Inc. (NASDAQ:TELL) is the least popular one with only 14 bullish hedge fund positions. Worthington Industries, Inc. (NYSE:WOR) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on WOR, though not to the same extent, as the stock returned 6.2% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
