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Here’s What Hedge Funds Think About Wheaton Precious Metals Corp. (WPM)

Insider Monkey has processed numerous 13F filings of hedge funds and successful 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 first 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 Wheaton Precious Metals Corp. (NYSE:WPM) based on that data.

Is Wheaton Precious Metals Corp. (NYSE:WPM) the right pick for your portfolio? The best stock pickers are in a bearish mood. The number of long hedge fund bets dropped by 2 lately. Our calculations also showed that wpm isn’t among the 30 most popular stocks among hedge funds. WPM was in 19 hedge funds’ portfolios at the end of the first quarter of 2019. There were 21 hedge funds in our database with WPM positions at the end of the previous quarter.

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. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

AQR CAPITAL MANAGEMENT

Cliff Asness of AQR Capital Management

Let’s go over the new hedge fund action surrounding Wheaton Precious Metals Corp. (NYSE:WPM).

How have hedgies been trading Wheaton Precious Metals Corp. (NYSE:WPM)?

Heading into the second quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WPM over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with WPM Positions

Among these funds, Horizon Asset Management held the most valuable stake in Wheaton Precious Metals Corp. (NYSE:WPM), which was worth $72.5 million at the end of the first quarter. On the second spot was Kopernik Global Investors which amassed $71.4 million worth of shares. Moreover, Renaissance Technologies, Sprott Asset Management, and AQR Capital Management were also bullish on Wheaton Precious Metals Corp. (NYSE:WPM), allocating a large percentage of their portfolios to this stock.

Since Wheaton Precious Metals Corp. (NYSE:WPM) has faced bearish sentiment from the smart money, it’s easy to see that there is a sect of funds that elected to cut their full holdings heading into Q3. Interestingly, John Overdeck and David Siegel’s Two Sigma Advisors sold off the largest investment of the “upper crust” of funds followed by Insider Monkey, comprising about $6.3 million in stock. Bruce Kovner’s fund, Caxton Associates LP, also sold off its stock, about $2.9 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds heading into Q3.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Wheaton Precious Metals Corp. (NYSE:WPM) but similarly valued. We will take a look at TechnipFMC plc (NYSE:FTI), Ubiquiti Networks Inc (NASDAQ:UBNT), Lennox International Inc. (NYSE:LII), and Eastman Chemical Company (NYSE:EMN). This group of stocks’ market valuations are similar to WPM’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
FTI 25 617440 4
UBNT 17 668120 -2
LII 19 138812 -5
EMN 30 518981 -3
Average 22.75 485838 -1.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.75 hedge funds with bullish positions and the average amount invested in these stocks was $486 million. That figure was $325 million in WPM’s case. Eastman Chemical Company (NYSE:EMN) is the most popular stock in this table. On the other hand Ubiquiti Networks Inc (NASDAQ:UBNT) is the least popular one with only 17 bullish hedge fund positions. Wheaton Precious Metals Corp. (NYSE:WPM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 WPM wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WPM investors were disappointed as the stock returned -10.6% 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 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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

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