Is W.W. Grainger, Inc. (GWW) A Good Stock To Buy?

In this article we will take a look at whether hedge funds think W.W. Grainger, Inc. (NYSE:GWW) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is GWW a good stock to buy? W.W. Grainger, Inc. (NYSE:GWW) was in 28 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 30. GWW shareholders have witnessed a decrease in support from the world’s most elite money managers of late. There were 29 hedge funds in our database with GWW positions at the end of the second quarter. Our calculations also showed that GWW isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s go over the key hedge fund action encompassing W.W. Grainger, Inc. (NYSE:GWW).

Do Hedge Funds Think GWW Is A Good Stock To Buy Now?

At the end of September, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in GWW over the last 25 quarters. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the number one position in W.W. Grainger, Inc. (NYSE:GWW). AQR Capital Management has a $99.5 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is D E Shaw, led by D. E. Shaw, holding a $35.6 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining peers that are bullish contain Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Ken Griffin’s Citadel Investment Group and Phill Gross and Robert Atchinson’s Adage Capital Management. In terms of the portfolio weights assigned to each position Te Ahumairangi Investment Management allocated the biggest weight to W.W. Grainger, Inc. (NYSE:GWW), around 1.87% of its 13F portfolio. Quantamental Technologies is also relatively very bullish on the stock, earmarking 0.86 percent of its 13F equity portfolio to GWW.

Judging by the fact that W.W. Grainger, Inc. (NYSE:GWW) has experienced falling interest from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of hedge funds who were dropping their full holdings in the third quarter. Intriguingly, Clint Carlson’s Carlson Capital dropped the largest investment of the “upper crust” of funds followed by Insider Monkey, valued at about $8.1 million in stock, and Jinghua Yan’s TwinBeech Capital was right behind this move, as the fund dumped about $2.4 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 now review hedge fund activity in other stocks – not necessarily in the same industry as W.W. Grainger, Inc. (NYSE:GWW) but similarly valued. These stocks are Live Nation Entertainment, Inc. (NYSE:LYV), Ingersoll Rand Inc. (NYSE:IR), Steris Plc (NYSE:STE), The Cooper Companies, Inc. (NYSE:COO), Regions Financial Corporation (NYSE:RF), The Clorox Company (NYSE:CLX), and Cenovus Energy Inc (NYSE:CVE). This group of stocks’ market valuations are similar to GWW’s market valuation.

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As you can see these stocks had an average of 34.7 hedge funds with bullish positions and the average amount invested in these stocks was $1010 million. That figure was $306 million in GWW’s case. Live Nation Entertainment, Inc. (NYSE:LYV) is the most popular stock in this table. On the other hand Regions Financial Corporation (NYSE:RF) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks W.W. Grainger, Inc. (NYSE:GWW) is even less popular than RF. Our overall hedge fund sentiment score for GWW is 32. 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. Hedge funds clearly dropped the ball on GWW as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 31.1% in 2021 through December 9th and still beat the market by 5.1 percentage points. A small number of hedge funds were also right about betting on GWW as the stock returned 28.5% since Q3 (through December 9th) and outperformed the market by an even larger margin.

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