Is WERN A Good Stock To Buy According To Hedge Funds?

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 Werner Enterprises, Inc. (NASDAQ:WERN) in this article.

Is WERN a good stock to buy? Werner Enterprises, Inc. (NASDAQ:WERN) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 32 hedge funds’ portfolios at the end of September. Our calculations also showed that WERN 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). At the end of this article we will also compare WERN to other stocks including Lexington Realty Trust (NYSE:LXP), Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), and Youdao, Inc. (NYSE:DAO) to get a better sense of its popularity.

Video: Watch our video about the top 5 most popular hedge fund stocks.

In the financial world there are a large number of tools stock traders have at their disposal to appraise stocks. A couple of the most underrated tools are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the top investment managers can outpace the market by a very impressive margin (see the details here).

Sander Gerber of Hudson Bay Capital

Sander Gerber of Hudson Bay Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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. With all of this in mind let’s take a look at the key hedge fund action encompassing Werner Enterprises, Inc. (NASDAQ:WERN).

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

At third quarter’s end, a total of 32 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in WERN over the last 21 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

Is WERN A Good Stock To Buy?

The largest stake in Werner Enterprises, Inc. (NASDAQ:WERN) was held by GLG Partners, which reported holding $57.7 million worth of stock at the end of September. It was followed by AQR Capital Management with a $54.8 million position. Other investors bullish on the company included D E Shaw, Two Sigma Advisors, and Select Equity Group. In terms of the portfolio weights assigned to each position 12th Street Asset Management allocated the biggest weight to Werner Enterprises, Inc. (NASDAQ:WERN), around 2.25% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, designating 1.22 percent of its 13F equity portfolio to WERN.

Seeing as Werner Enterprises, Inc. (NASDAQ:WERN) has experienced bearish sentiment from hedge fund managers, we can see that there is a sect of funds who sold off their full holdings by the end of the third quarter. At the top of the heap, Stuart J. Zimmer’s Zimmer Partners dropped the largest stake of the “upper crust” of funds monitored by Insider Monkey, totaling an estimated $42.4 million in stock, and Alexander Mitchell’s Scopus Asset Management was right behind this move, as the fund cut about $24.1 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Werner Enterprises, Inc. (NASDAQ:WERN) but similarly valued. These stocks are Lexington Realty Trust (NYSE:LXP), Deciphera Pharmaceuticals, Inc. (NASDAQ:DCPH), Youdao, Inc. (NYSE:DAO), Crocs, Inc. (NASDAQ:CROX), Immunovant, Inc. (NASDAQ:IMVT), BMC Stock Holdings, Inc. (NASDAQ:BMCH), and Momo Inc (NASDAQ:MOMO). This group of stocks’ market values are similar to WERN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LXP 17 49428 7
DCPH 30 629607 -1
DAO 10 290560 -3
CROX 35 653957 -2
IMVT 29 562531 -2
BMCH 31 571107 5
MOMO 30 362883 -4
Average 26 445725 0

View table here if you experience formatting issues.

As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $446 million. That figure was $337 million in WERN’s case. Crocs, Inc. (NASDAQ:CROX) is the most popular stock in this table. On the other hand Youdao, Inc. (NYSE:DAO) is the least popular one with only 10 bullish hedge fund positions. Werner Enterprises, Inc. (NASDAQ:WERN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WERN is 79. 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. 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately WERN wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WERN were disappointed as the stock returned -4.3% since the end of September (through 12/18) 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.

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