The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 30th. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Wells Fargo & Company (NYSE:WFC).
Wells Fargo & Company (NYSE:WFC) has experienced a decrease in enthusiasm from smart money lately. Wells Fargo & Company (NYSE:WFC) was in 94 hedge funds’ portfolios at the end of June. The all time high for this statistic is 104. There were 96 hedge funds in our database with WFC positions at the end of the first quarter. Our calculations also showed that WFC ranked 23rd among the 30 most popular stocks among hedge funds (click for Q2 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. Now let’s take a gander at the key hedge fund action encompassing Wells Fargo & Company (NYSE:WFC).
Do Hedge Funds Think WFC Is A Good Stock To Buy Now?
At the end of June, a total of 94 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WFC over the last 24 quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in Wells Fargo & Company (NYSE:WFC) was held by Eagle Capital Management, which reported holding $1581 million worth of stock at the end of June. It was followed by Theleme Partners with a $911.6 million position. Other investors bullish on the company included Pzena Investment Management, Citadel Investment Group, and First Pacific Advisors LLC. In terms of the portfolio weights assigned to each position Voleon Capital allocated the biggest weight to Wells Fargo & Company (NYSE:WFC), around 33.32% of its 13F portfolio. Theleme Partners is also relatively very bullish on the stock, dishing out 26.62 percent of its 13F equity portfolio to WFC.
Due to the fact that Wells Fargo & Company (NYSE:WFC) has experienced bearish sentiment from hedge fund managers, we can see that there was a specific group of hedge funds who were dropping their full holdings last quarter. At the top of the heap, Jacob Mitchell’s Antipodes Partners cut the biggest stake of the 750 funds followed by Insider Monkey, totaling close to $93 million in stock. Ravi Chopra’s fund, Azora Capital, also dropped its stock, about $31.7 million worth. These moves are important to note, as total hedge fund interest dropped by 2 funds last quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Wells Fargo & Company (NYSE:WFC) but similarly valued. We will take a look at Accenture Plc (NYSE:ACN), BHP Group (NYSE:BHP), Shopify Inc (NYSE:SHOP), United Parcel Service, Inc. (NYSE:UPS), T-Mobile US, Inc. (NASDAQ:TMUS), Texas Instruments Incorporated (NASDAQ:TXN), and Costco Wholesale Corporation (NASDAQ:COST). All of these stocks’ market caps are similar to WFC’s market cap.
|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 58.7 hedge funds with bullish positions and the average amount invested in these stocks was $4983 million. That figure was $7084 million in WFC’s case. T-Mobile US, Inc. (NASDAQ:TMUS) is the most popular stock in this table. On the other hand BHP Group (NYSE:BHP) is the least popular one with only 18 bullish hedge fund positions. Wells Fargo & Company (NYSE:WFC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WFC is 76.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.1% in 2021 through September 20th and beat the market again by 6.9 percentage points. Unfortunately WFC wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WFC were disappointed as the stock returned 1.6% since the end of June (through 9/20) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Wells Fargo & Company (NYSE:WFC)
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Disclosure: None. This article was originally published at Insider Monkey.