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Hedge Funds Keep Buying Wingstop Inc (WING)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Wingstop Inc (NASDAQ:WING) based on that data and determine whether they were really smart about the stock.

Wingstop Inc (NASDAQ:WING) was in 28 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 27. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. WING has experienced an increase in enthusiasm from smart money lately. There were 27 hedge funds in our database with WING holdings at the end of March. Our calculations also showed that WING isn’t among the 30 most popular stocks among hedge funds (click for Q2 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.

To the average investor there are a multitude of indicators investors use to analyze stocks. A duo of the less known indicators are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite money managers can outpace their index-focused peers by a healthy margin (see the details here).

Dmitry Balyasny of Balyasny Asset Managemnet

Dmitry Balyasny of Balyasny Asset Management

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Keeping this in mind let’s take a look at the latest hedge fund action regarding Wingstop Inc (NASDAQ:WING).

What have hedge funds been doing with Wingstop Inc (NASDAQ:WING)?

At Q2’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WING over the last 20 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is WING A Good Stock To Buy?

More specifically, Renaissance Technologies was the largest shareholder of Wingstop Inc (NASDAQ:WING), with a stake worth $135.1 million reported as of the end of September. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $52.4 million. Two Sigma Advisors, GLG Partners, and Citadel Investment Group 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 Algert Coldiron Investors allocated the biggest weight to Wingstop Inc (NASDAQ:WING), around 0.78% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, setting aside 0.58 percent of its 13F equity portfolio to WING.

Consequently, some big names were leading the bulls’ herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the most valuable position in Wingstop Inc (NASDAQ:WING). Arrowstreet Capital had $52.4 million invested in the company at the end of the quarter. Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital also made a $3.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace’s Marshall Wace LLP, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and Parvinder Thiara’s Athanor Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Wingstop Inc (NASDAQ:WING) but similarly valued. We will take a look at Neogen Corporation (NASDAQ:NEOG), First Financial Bankshares Inc (NASDAQ:FFIN), TriNet Group Inc (NYSE:TNET), SelectQuote, Inc. (NYSE:SLQT), HUYA Inc. (NYSE:HUYA), Toll Brothers Inc (NYSE:TOL), and Essent Group Ltd (NYSE:ESNT). This group of stocks’ market values are similar to WING’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NEOG 18 40479 2
FFIN 18 20741 4
TNET 21 338757 2
SLQT 29 289573 29
HUYA 21 346427 3
TOL 39 428011 19
ESNT 29 260562 3
Average 25 246364 8.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 25 hedge funds with bullish positions and the average amount invested in these stocks was $246 million. That figure was $311 million in WING’s case. Toll Brothers Inc (NYSE:TOL) is the most popular stock in this table. On the other hand Neogen Corporation (NASDAQ:NEOG) is the least popular one with only 18 bullish hedge fund positions. Wingstop Inc (NASDAQ:WING) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WING is 59.8. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately WING wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on WING were disappointed as the stock returned -2.3% during the same time 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 10 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.