Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
WESCO International, Inc. (NYSE:WCC) shares haven’t seen a lot of action during the fourth quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds’ portfolios at the end of September. At the end of this article we will also compare WCC to other stocks including Armstrong World Industries, Inc. (NYSE:AWI), Zynga Inc (NASDAQ:ZNGA), and Retail Opportunity Investments Corp (NASDAQ:ROIC) 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.
With all of this in mind, let’s go over the recent action encompassing WESCO International, Inc. (NYSE:WCC).
What have hedge funds been doing with WESCO International, Inc. (NYSE:WCC)?
At the end of the third quarter, a total of 22 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged from the second quarter of 2016. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Polaris Capital Management, run by Bernard Horn, holds the largest position in WESCO International, Inc. (NYSE:WCC). According to regulatory filings, the fund has a $28.6 million position in the stock, comprising 2.2% of its 13F portfolio. Sitting at the No. 2 spot is Basswood Capital, managed by Matthew Lindenbaum, which holds a $21 million position; 1% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions include Alexander Mitchell’s Scopus Asset Management, John Overdeck and David Siegel’s Two Sigma Advisors and William Harnisch’s Peconic Partners LLC.