Weatherford International Ltd (NYSE:WFT)’s stock is rebounding after hitting a 52-week low of $4.71 last week. The Texas based Oil and Gas company was battered by the slump in oil prices. Recently, Hi-Crush Partners asked Weatherford to prepay for supplies. This raises a red flag as Weatherford is already grappling with financial problems, and if other vendors start asking for prepayments, the company’s cash flow will be dented to a serious degree. Weatherford’s first quarter results were also disappointing. Revenue fell 21% and EBITDA also declined 57% to $100 million in the first quarter from $233 million in the fourth quarter of 2015. Nevertheless, despite today’s gains, the stock is down by over 30% since the beginning of the year.
In addition, Weatherford International Ltd (NYSE:WFT) investors should pay attention to an increase in support from the world’s most elite money managers in recent months. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Mednax Inc. (NYSE:MD), Brookfield Property Partners LP (NYSE:BPY), and Lennox International Inc. (NYSE:LII) to gather more data points.
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Today there are tons of signals shareholders use to evaluate stocks. Two of the best signals are hedge fund and insider trading interest. We have shown that, historically, those who follow the best picks of the elite investment managers can trounce the market by a superb amount (see the details here).
Now, let’s take a look at the new action surrounding Weatherford International Ltd (NYSE:WFT).
At the end of the first quarter, a total of 37 of the hedge funds tracked by Insider Monkey were long this stock, a change of 32% from the previous quarter. With the smart money’s capital changing hands, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, William B. Gray’s Orbis Investment Management has the number one position in Weatherford International Ltd (NYSE:WFT), worth close to $130.3 million, comprising 0.9% of its total 13F portfolio. The second most bullish fund manager is Alyeska Investment Group, led by Anand Parekh, holding a $82.5 million position; 0.8% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish consist of Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and Stuart J. Zimmer’s Zimmer Partners.
On the following page, we are going to take a look at some funds with brand new positions in Weatherford International Ltd (NYSE:WFT).
With a general bullishness amongst the heavyweights, specific money managers have been driving this bullishness. Zimmer Partners created the most valuable position in Weatherford International Ltd (NYSE:WFT) and had $46.7 million invested in the company at the end of the quarter. Jacob Gottlieb’s Visium Asset Management also made am $8.1 million investment in the stock during the quarter. The following funds were also among the new WFT investors: Todd J. Kantor’s Encompass Capital Advisors, Benjamin A. Smith’s Laurion Capital Management, and D. E. Shaw’s D E Shaw.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Weatherford International Ltd (NYSE:WFT) but similarly valued. We will take a look at Mednax Inc. (NYSE:MD), Brookfield Property Partners LP (NYSE:BPY), Lennox International Inc. (NYSE:LII), and Westlake Chemical Corporation (NYSE:WLK). This group of stocks’ market valuations are closest to WFT’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MD | 16 | 133829 | -2 |
| BPY | 6 | 37227 | 0 |
| LII | 17 | 101541 | -3 |
| WLK | 30 | 314113 | 1 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $147 million. That figure was $653 million in WFT’s case. Westlake Chemical Corporation (NYSE:WLK) is the most popular stock in this table. On the other hand Brookfield Property Partners LP (NYSE:BPY) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Weatherford International Ltd (NYSE:WFT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None
