Insider Monkey has processed numerous 13F filings of hedge funds and famous investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and investors’ positions as of the end of the fourth quarter. You can find write-ups 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 and analyze what the smart money thinks of Waddell & Reed Financial, Inc. (NYSE:WDR) based on that data.
Is Waddell & Reed Financial, Inc. (NYSE:WDR) a great stock to buy now? Prominent investors are turning less bullish. The number of long hedge fund bets dropped by 1 lately. Our calculations also showed that WDR isn’t among the 30 most popular stocks among hedge funds. WDR was in 16 hedge funds’ portfolios at the end of the fourth quarter of 2018. There were 17 hedge funds in our database with WDR holdings at the end of the previous quarter.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We’re going to check out the fresh hedge fund action encompassing Waddell & Reed Financial, Inc. (NYSE:WDR).
How have hedgies been trading Waddell & Reed Financial, Inc. (NYSE:WDR)?
Heading into the first quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 17 hedge funds with a bullish position in WDR a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
Among these funds, Fisher Asset Management held the most valuable stake in Waddell & Reed Financial, Inc. (NYSE:WDR), which was worth $32.4 million at the end of the fourth quarter. On the second spot was GAMCO Investors which amassed $29.2 million worth of shares. Moreover, AQR Capital Management, Two Sigma Advisors, and Renaissance Technologies were also bullish on Waddell & Reed Financial, Inc. (NYSE:WDR), allocating a large percentage of their portfolios to this stock.
Judging by the fact that Waddell & Reed Financial, Inc. (NYSE:WDR) has experienced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there is a sect of funds who were dropping their positions entirely in the third quarter. Interestingly, Steve Cohen’s Point72 Asset Management sold off the largest investment of all the hedgies watched by Insider Monkey, comprising an estimated $3.3 million in stock, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital was right behind this move, as the fund dumped about $2.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 1 funds in the third quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Waddell & Reed Financial, Inc. (NYSE:WDR) but similarly valued. We will take a look at American Finance Trust, Inc. (NASDAQ:AFIN), The Medicines Company (NASDAQ:MDCO), Office Depot Inc (NASDAQ:ODP), and Compass Minerals International, Inc. (NYSE:CMP). This group of stocks’ market values match WDR’s market value.
|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 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $151 million. That figure was $91 million in WDR’s case. Office Depot Inc (NASDAQ:ODP) is the most popular stock in this table. On the other hand American Finance Trust, Inc. (NASDAQ:AFIN) is the least popular one with only 3 bullish hedge fund positions. Waddell & Reed Financial, Inc. (NYSE:WDR) is not the most popular stock in this group but hedge fund interest is still above average. 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately WDR wasn’t nearly as popular as these 15 stock and hedge funds that were betting on WDR were disappointed as the stock returned 4.4% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.