Is Werner Enterprises, Inc. (WERN) Going to Burn These Hedge Funds?

Hedge funds and other investment firms run by legendary investors like Israel Englander and Ray Dalio are entrusted to manage billions of dollars of accredited investors’ money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.

Is Werner Enterprises, Inc. (NASDAQ:WERN) worth your attention right now? Prominent investors are getting more optimistic. The number of long hedge fund positions advanced by 2 lately. WERN was in 15 hedge funds’ portfolios at the end of the third quarter of 2016. There were 13 hedge funds in our database with WERN holdings at the end of the previous quarter. At the end of this article we will also compare WERN to other stocks including Cambrex Corporation (NYSE:CBM), Insperity Inc (NYSE:NSP), and Avon Products, Inc. (NYSE:AVP) to get a better sense of its popularity.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

What does the smart money think about Werner Enterprises, Inc. (NASDAQ:WERN)?

At the end of the third quarter, a total of 15 of the hedge funds tracked by Insider Monkey held long positions in this stock, a 15% rise from the previous quarter, as hedge fund ownership remains somewhat volatile. By comparison, 14 hedge funds held shares or bullish call options in WERN heading into this year. 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, Cliff Asness’ AQR Capital Management has the number one position in Werner Enterprises, Inc. (NASDAQ:WERN), worth close to $28.5 million. The second most bullish fund manager is Royce & Associates, led by Chuck Royce, which holds a $20.5 million position. Some other peers with similar optimism comprise Jim Simons’ Renaissance Technologies, Michael O’Keefe’s 12th Street Asset Management, and David E. Shaw’s D E Shaw. We should note that 12th Street Asset Management is among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As industry-wide interest jumped, key money managers were leading the bulls’ herd. Buckingham Capital Management, led by David Keidan, assembled the most valuable position in Werner Enterprises, Inc. (NASDAQ:WERN). Buckingham Capital Management had $2 million invested in the company at the end of the quarter. Matthew Tewksbury’s Stevens Capital Management also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Glenn Russell Dubin’s Highbridge Capital Management, Dmitry Balyasny’s Balyasny Asset Management, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s also examine hedge fund activity in other stocks similar to Werner Enterprises, Inc. (NASDAQ:WERN). These stocks are Cambrex Corporation (NYSE:CBM), Insperity Inc (NYSE:NSP), Avon Products, Inc. (NYSE:AVP), and South State Corporation (NASDAQ:SSB). This group of stocks’ market values are closest to WERN’s market value.

As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $166 million. That figure was $81 million in WERN’s case. Avon Products, Inc. (NYSE:AVP) is the most popular stock in this table. On the other hand South State Corporation (NASDAQ:SSB) is the least popular one with only 11 bullish hedge fund positions. Werner Enterprises, Inc. (NASDAQ:WERN) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard AVP might be a better candidate to consider taking a long position in.

Disclosure: None