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Hedge Funds Not Done Buying Wayfair Inc (W)?

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 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Wayfair Inc (NYSE:W).

Wayfair Inc (NYSE:W) was in 34 hedge funds’ portfolios at the end of March. W has experienced an increase in support from the world’s most elite money managers recently. There were 33 hedge funds in our database with W positions at the end of the previous quarter. Our calculations also showed that W isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

According to most investors, hedge funds are seen as unimportant, old investment tools of years past. While there are greater than 8000 funds trading at the moment, We choose to focus on the upper echelon of this club, about 850 funds. These investment experts shepherd most of the hedge fund industry’s total capital, and by watching their unrivaled stock picks, Insider Monkey has figured out numerous investment strategies that have historically outperformed the broader indices. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Glen Kacher of Light Street Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a glance at the latest hedge fund action surrounding Wayfair Inc (NYSE:W).

Hedge fund activity in Wayfair Inc (NYSE:W)

At the end of the first quarter, a total of 34 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards W over the last 18 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

Is W A Good Stock To Buy?

Among these funds, Spruce House Investment Management held the most valuable stake in Wayfair Inc (NYSE:W), which was worth $387.4 million at the end of the third quarter. On the second spot was Bares Capital Management which amassed $254.3 million worth of shares. Nantahala Capital Management, Whale Rock Capital Management, and Light Street Capital 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 Spruce House Investment Management allocated the biggest weight to Wayfair Inc (NYSE:W), around 24.46% of its 13F portfolio. Bares Capital Management is also relatively very bullish on the stock, dishing out 9.17 percent of its 13F equity portfolio to W.

With a general bullishness amongst the heavyweights, key hedge funds were leading the bulls’ herd. Light Street Capital, managed by Glen Kacher, assembled the largest position in Wayfair Inc (NYSE:W). Light Street Capital had $61.8 million invested in the company at the end of the quarter. Chen Tianqiao’s Shanda Asset Management also initiated a $16 million position during the quarter. The following funds were also among the new W investors: Allan Mecham’s Arlington Value Capital, David Greenspan’s Slate Path Capital, and Lee Ainslie’s Maverick Capital.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Wayfair Inc (NYSE:W) but similarly valued. These stocks are Repligen Corporation (NASDAQ:RGEN), Haemonetics Corporation (NYSE:HAE), RealPage, Inc. (NASDAQ:RP), and Kinross Gold Corporation (NYSE:KGC). All of these stocks’ market caps are closest to W’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RGEN 21 321987 -2
HAE 34 710291 1
RP 29 603843 -7
KGC 28 447018 3
Average 28 520785 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 28 hedge funds with bullish positions and the average amount invested in these stocks was $521 million. That figure was $1043 million in W’s case. Haemonetics Corporation (NYSE:HAE) is the most popular stock in this table. On the other hand Repligen Corporation (NASDAQ:RGEN) is the least popular one with only 21 bullish hedge fund positions. Wayfair Inc (NYSE:W) is not the most popular stock in this group but hedge fund interest is still above average. 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on W as the stock returned 221% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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