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Here’s What Hedge Funds Think About Winnebago Industries, Inc. (WGO)

Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 4 percentage points through September 30th. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.

Winnebago Industries, Inc. (NYSE:WGO) has seen a decrease in activity from the world’s largest hedge funds in recent months. Our calculations also showed that WGO isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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.

TUDOR INVESTMENT CORP

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to review the latest hedge fund action regarding Winnebago Industries, Inc. (NYSE:WGO).

How are hedge funds trading Winnebago Industries, Inc. (NYSE:WGO)?

At Q2’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WGO over the last 16 quarters. With hedge funds’ sentiment swirling, there exists a few notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).

WGO_oct2019

More specifically, Punch Card Capital was the largest shareholder of Winnebago Industries, Inc. (NYSE:WGO), with a stake worth $53.8 million reported as of the end of March. Trailing Punch Card Capital was Royce & Associates, which amassed a stake valued at $32.4 million. Driehaus Capital, GAMCO Investors, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

Seeing as Winnebago Industries, Inc. (NYSE:WGO) has experienced a decline in interest from hedge fund managers, we can see that there is a sect of fund managers who sold off their entire stakes by the end of the second quarter. Interestingly, Brad Dunkley and Blair Levinsky’s Waratah Capital Advisors said goodbye to the largest investment of the “upper crust” of funds tracked by Insider Monkey, comprising close to $22.3 million in stock, and Clint Carlson’s Carlson Capital was right behind this move, as the fund dumped about $10.7 million worth. These transactions are intriguing to say the least, as total hedge fund interest was cut by 2 funds by the end of the second quarter.

Let’s check out hedge fund activity in other stocks similar to Winnebago Industries, Inc. (NYSE:WGO). We will take a look at Epizyme Inc (NASDAQ:EPZM), Varex Imaging Corporation (NASDAQ:VREX), Momenta Pharmaceuticals, Inc. (NASDAQ:MNTA), and Atkore International Group Inc. (NYSE:ATKR). All of these stocks’ market caps match WGO’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
EPZM 21 350220 2
VREX 20 98089 0
MNTA 19 181200 1
ATKR 17 90536 -2
Average 19.25 180011 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.25 hedge funds with bullish positions and the average amount invested in these stocks was $180 million. That figure was $110 million in WGO’s case. Epizyme Inc (NASDAQ:EPZM) is the most popular stock in this table. On the other hand Atkore International Group Inc. (NYSE:ATKR) is the least popular one with only 17 bullish hedge fund positions. Compared to these stocks Winnebago Industries, Inc. (NYSE:WGO) is even less popular than ATKR. Hedge funds dodged a bullet by taking a bearish stance towards WGO. Our calculations showed that the top 20 most popular hedge fund stocks returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately WGO wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); WGO investors were disappointed as the stock returned -0.4% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.

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

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