Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth also depends on it. Regardless of the various methods used by elite investors like David Tepper and David Abrams, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.
Is Western Digital Corporation (NASDAQ:WDC) a good stock to buy now? Investors who are in the know are becoming more confident. The number of long hedge fund positions improved by 8 in recent months. Our calculations also showed that wdc isn’t among the 30 most popular stocks among hedge funds.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.
Let’s take a gander at the key hedge fund action regarding Western Digital Corporation (NASDAQ:WDC).
What have hedge funds been doing with Western Digital Corporation (NASDAQ:WDC)?
At Q1’s end, a total of 33 of the hedge funds tracked by Insider Monkey were long this stock, a change of 32% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WDC over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Western Digital Corporation (NASDAQ:WDC) was held by Renaissance Technologies, which reported holding $138.6 million worth of stock at the end of March. It was followed by Citadel Investment Group with a $99.2 million position. Other investors bullish on the company included Maplelane Capital, KCL Capital, and D E Shaw.
As industrywide interest jumped, some big names were leading the bulls’ herd. Maplelane Capital, managed by Leon Shaulov, assembled the biggest call position in Western Digital Corporation (NASDAQ:WDC). Maplelane Capital had $50.2 million invested in the company at the end of the quarter. Kevin Cottrell and Chris LaSusa’s KCL Capital also initiated a $33.6 million position during the quarter. The other funds with new positions in the stock are Brandon Haley’s Holocene Advisors, Kevin Cottrell and Chris LaSusa’s KCL Capital, and Leon Shaulov’s Maplelane Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Western Digital Corporation (NASDAQ:WDC) but similarly valued. We will take a look at Principal Financial Group Inc (NASDAQ:PFG), Teleflex Incorporated (NYSE:TFX), Icahn Enterprises LP (NASDAQ:IEP), and Coca-Cola FEMSA, S.A.B. de C.V. (NYSE:KOF). This group of stocks’ market values resemble WDC’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| PFG | 15 | 62018 | -3 |
| TFX | 19 | 765454 | 4 |
| IEP | 5 | 12864139 | -1 |
| KOF | 9 | 520656 | 3 |
| Average | 12 | 3553067 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $3553 million. That figure was $388 million in WDC’s case. Teleflex Incorporated (NYSE:TFX) is the most popular stock in this table. On the other hand Icahn Enterprises LP (NASDAQ:IEP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Western Digital Corporation (NASDAQ:WDC) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately WDC wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WDC were disappointed as the stock returned -17.9% during the same 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
