Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 817 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Washington Federal Inc. (NASDAQ:WAFD) in this article.
Is WAFD a good stock to buy now? Washington Federal Inc. (NASDAQ:WAFD) has seen an increase in hedge fund interest recently. Washington Federal Inc. (NASDAQ:WAFD) was in 16 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 19. Our calculations also showed that WAFD isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to take a look at the new hedge fund action encompassing Washington Federal Inc. (NASDAQ:WAFD).
Do Hedge Funds Think WAFD Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in WAFD a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Ken Griffin’s Citadel Investment Group has the largest position in Washington Federal Inc. (NASDAQ:WAFD), worth close to $22.8 million, amounting to less than 0.1%% of its total 13F portfolio. Sitting at the No. 2 spot is Israel Englander of Millennium Management, with a $9.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions include D. E. Shaw’s D E Shaw, Renaissance Technologies and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position Tudor Investment Corp allocated the biggest weight to Washington Federal Inc. (NASDAQ:WAFD), around 0.07% of its 13F portfolio. Marshall Wace LLP is also relatively very bullish on the stock, dishing out 0.03 percent of its 13F equity portfolio to WAFD.
As industrywide interest jumped, key money managers were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the most valuable position in Washington Federal Inc. (NASDAQ:WAFD). Arrowstreet Capital had $2 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $0.4 million investment in the stock during the quarter. The only other fund with a new position in the stock is Mika Toikka’s AlphaCrest Capital Management.
Let’s now review hedge fund activity in other stocks similar to Washington Federal Inc. (NASDAQ:WAFD). We will take a look at AssetMark Financial Holdings, Inc. (NYSE:AMK), Helmerich & Payne, Inc. (NYSE:HP), Spirit Airlines Incorporated (NASDAQ:SAVE), Texas Capital Bancshares Inc (NASDAQ:TCBI), Paramount Group Inc (NYSE:PGRE), Boise Cascade Co (NYSE:BCC), and Liberty Latin America Ltd. (NASDAQ:LILAK). This group of stocks’ market valuations resemble WAFD’s market valuation.
|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 22.6 hedge funds with bullish positions and the average amount invested in these stocks was $138 million. That figure was $59 million in WAFD’s case. Helmerich & Payne, Inc. (NYSE:HP) is the most popular stock in this table. On the other hand AssetMark Financial Holdings, Inc. (NYSE:AMK) is the least popular one with only 10 bullish hedge fund positions. Washington Federal Inc. (NASDAQ:WAFD) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WAFD is 46.5. 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on WAFD as the stock returned 22.2% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.