Is WERN Stock A Buy or Sell?

The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Werner Enterprises, Inc. (NASDAQ:WERN).

Is WERN stock a buy? The smart money was getting less bullish. The number of long hedge fund positions were cut by 8 in recent months. Werner Enterprises, Inc. (NASDAQ:WERN) was in 24 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 32. Our calculations also showed that WERN isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, auto parts business is a recession resistant business, so we are taking a closer look at this discount auto parts stock that is growing at a 196% annualized rate. We go through lists like the 15 best micro-cap stocks to buy now to identify the next stock with 10x upside potential. 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 glance at the recent hedge fund action encompassing Werner Enterprises, Inc. (NASDAQ:WERN).

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

At the end of the fourth quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WERN over the last 22 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Werner Enterprises, Inc. (NASDAQ:WERN) was held by GLG Partners, which reported holding $40 million worth of stock at the end of December. It was followed by AQR Capital Management with a $39.2 million position. Other investors bullish on the company included D E Shaw, Royce & Associates, and Shellback Capital. 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 1.82% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, dishing out 1.23 percent of its 13F equity portfolio to WERN.

Due to the fact that Werner Enterprises, Inc. (NASDAQ:WERN) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of money managers that decided to sell off their full holdings heading into Q1. Intriguingly, Robert Joseph Caruso’s Select Equity Group dropped the biggest investment of the 750 funds tracked by Insider Monkey, comprising about $24.9 million in stock. Mark Coe’s fund, Intrinsic Edge Capital, also cut its stock, about $7.1 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 8 funds heading into Q1.

Let’s check out hedge fund activity in other stocks similar to Werner Enterprises, Inc. (NASDAQ:WERN). We will take a look at Worthington Industries, Inc. (NYSE:WOR), Independent Bank Group Inc (NASDAQ:IBTX), California Water Service Group (NYSE:CWT), Moog Inc (NYSE:MOG), ESCO Technologies Inc. (NYSE:ESE), HB Fuller Co (NYSE:FUL), and Stepan Company (NYSE:SCL). This group of stocks’ market caps match WERN’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.7 hedge funds with bullish positions and the average amount invested in these stocks was $94 million. That figure was $207 million in WERN’s case. Moog Inc (NYSE:MOG) is the most popular stock in this table. On the other hand Worthington Industries, Inc. (NYSE:WOR) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Werner Enterprises, Inc. (NASDAQ:WERN) is more popular among hedge funds. Our overall hedge fund sentiment score for WERN is 69.5. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on WERN as the stock returned 22.9% since the end of December (through 4/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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