Is Wayfair Inc (W) Going To Burn These Hedge Funds?

Insider Monkey has processed numerous 13F filings of hedge funds and successful value 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 second 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 Wayfair Inc (NYSE:W) based on that data.

Is Wayfair Inc (NYSE:W) a bargain? The best stock pickers are buying. The number of long hedge fund positions increased by 2 lately. Our calculations also showed that W isn’t among the 30 most popular stocks among hedge funds (view the video below). W was in 32 hedge funds’ portfolios at the end of June. There were 30 hedge funds in our database with W positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to 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 hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.


Unlike some fund managers who are betting on Dow reaching 40000 in a year, 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. Let’s take a peek at the fresh hedge fund action regarding Wayfair Inc (NYSE:W).

How are hedge funds trading Wayfair Inc (NYSE:W)?

At Q2’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 7% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards W over the last 16 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

D. E. Shaw

Among these funds, Spruce House Investment Management held the most valuable stake in Wayfair Inc (NYSE:W), which was worth $547.5 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $360.6 million worth of shares. Moreover, D E Shaw, Bares Capital Management, and Whale Rock Capital Management were also bullish on Wayfair Inc (NYSE:W), allocating a large percentage of their portfolios to this stock.

As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Samlyn Capital, managed by Robert Pohly, assembled the biggest call position in Wayfair Inc (NYSE:W). Samlyn Capital had $68.8 million invested in the company at the end of the quarter. Robert Pohly’s Samlyn Capital also made a $51.7 million investment in the stock during the quarter. The following funds were also among the new W investors: Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, Leon Shaulov’s Maplelane Capital, and David Fiszel’s Honeycomb Asset Management.

Let’s go over hedge fund activity in other stocks similar to Wayfair Inc (NYSE:W). We will take a look at Seagate Technology plc (NASDAQ:STX), Lincoln National Corporation (NYSE:LNC), Citrix Systems, Inc. (NASDAQ:CTXS), and IDEX Corporation (NYSE:IEX). This group of stocks’ market values resemble W’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
STX 23 1870540 -1
LNC 35 620312 -5
CTXS 34 2028377 0
IEX 15 374953 -1
Average 26.75 1223546 -1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $1224 million. That figure was $2314 million in W’s case. Lincoln National Corporation (NYSE:LNC) is the most popular stock in this table. On the other hand IDEX Corporation (NYSE:IEX) is the least popular one with only 15 bullish hedge fund positions. Wayfair Inc (NYSE:W) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately W wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on W were disappointed as the stock returned -23.2% 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 this year.

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