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Is WGL Holdings Inc (WGL) A Good Stock To Buy?

Before we spend many hours researching a company, we’d like to analyze what hedge funds and billionaire investors think of the stock first. We would like to do so because the elite investors’ consensus returns have been exceptional. The top 30 S&P 500 stocks among hedge funds at the end of September 2014 yielded an average return of 9.5% during the last 12 months ending in October 30. Sixty three percent of these 30 stocks outperformed the market. Although the elite funds occasionally have their duds, such as Micron and Anadarko Petroleum, which fell 50% and 26%, respectively during the same time period, the hedge fund picks seem to work on average. In the following paragraphs, we find out what the billionaire investors and hedge funds think of WGL Holdings Inc (NYSE:WGL).

Is WGL Holdings Inc (NYSE:WGL) an attractive investment now? Investors who are in the know are in a pessimistic mood. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience. 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 Cypress Semiconductor Corporation (NASDAQ:CY), Outfront Media Inc (NYSE:OUT), and Oshkosh Corporation (NYSE:OSK) to gather more data points.

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At the moment there are a large number of signals market participants have at their disposal to assess publicly traded companies. A duo of the most underrated signals are hedge fund and insider trading indicators. our experts have shown that, historically, those who follow the best picks of the top fund managers can outperform the market by a very impressive amount (see the details here).

Now, we’re going to take a glance at the new action regarding WGL Holdings Inc (NYSE:WGL).

What does the smart money think about WGL Holdings Inc (NYSE:WGL)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, flat over the quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Cliff Asness’ AQR Capital Management had the largest position in WGL Holdings Inc (NYSE:WGL), worth close to $27.9 million, comprising 0.1% of its total 13F portfolio. The second largest stake is held by Israel Englander of Millennium Management, with a $9.5 million position; less than 0.1% of its 13F portfolio is allocated to the company. Other members of the smart money with similar optimism contain Joel Greenblatt’s Gotham Asset Management,  D E Shaw and Renaissance Technologies.

Due to the fact that WGL Holdings Inc (NYSE:WGL) has faced a declination in interest from the entirety of the hedge funds we track, we can see that there is a sect of hedgies that decided to sell off their positions entirely heading into Q4. Interestingly, Matthew Tewksbury’s Stevens Capital Management sold off the biggest investment of the “upper crust” of funds tracked by Insider Monkey, worth close to $0.5 million in stock. Matthew Hulsizer’s fund, PEAK6 Capital Management, also said goodbye to its stock, about $0.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as WGL Holdings Inc (NYSE:WGL) but similarly valued. We will take a look at Cypress Semiconductor Corporation (NASDAQ:CY), Outfront Media Inc (NYSE:OUT), Oshkosh Corporation (NYSE:OSK), and UIL Holdings Corporation (NYSE:UIL). This group of stocks’ market caps match WGL Holdings Inc (NYSE:WGL)’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CY 32 649609 -3
OUT 13 139666 -6
OSK 21 173010 5
UIL 10 371942 -3

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 $334 million, which is higher than the $54 million in WGL Holdings Inc (NYSE:WGL)’s case. WGL Holdings Inc (NYSE:WGL) is not the least popular stock in this group, but the hedge fund interest is still below average. Moreover, the company witnessed a flat change in sentiment, as compared to a decline for the other four stocks. This suggests that WGL Holdings might represent a good stock to hold at the moment, but in any case a further analysis is required.

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