At Insider Monkey, we pore over the filings of nearly 817 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not WideOpenWest, Inc. (NYSE:WOW) makes for a good investment right now.
Is WOW a good stock to buy now? WideOpenWest, Inc. (NYSE:WOW) was in 9 hedge funds’ portfolios at the end of September. The all time high for this statistics is 20. WOW investors should pay attention to a decrease in hedge fund sentiment lately. There were 13 hedge funds in our database with WOW holdings at the end of June. Our calculations also showed that WOW 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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 we’re going to take a glance at the recent hedge fund action surrounding WideOpenWest, Inc. (NYSE:WOW).
Do Hedge Funds Think WOW Is A Good Stock To Buy Now?
At the end of September, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -31% from the second quarter of 2020. By comparison, 14 hedge funds held shares or bullish call options in WOW a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Indaba Capital Management, managed by Derek C. Schrier, holds the number one position in WideOpenWest, Inc. (NYSE:WOW). Indaba Capital Management has a $6 million position in the stock, comprising 1.9% of its 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $3.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism consist of Mario Gabelli’s GAMCO Investors, Mason Hawkins’s Southeastern Asset Management and D. E. Shaw’s D E Shaw. In terms of the portfolio weights assigned to each position Indaba Capital Management allocated the biggest weight to WideOpenWest, Inc. (NYSE:WOW), around 1.9% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, setting aside 0.04 percent of its 13F equity portfolio to WOW.
Since WideOpenWest, Inc. (NYSE:WOW) has witnessed bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there exists a select few fund managers that slashed their entire stakes heading into Q4. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP dumped the biggest position of all the hedgies followed by Insider Monkey, valued at close to $0.4 million in stock. Roger Ibbotson’s fund, Zebra Capital Management, also sold off its stock, about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 4 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as WideOpenWest, Inc. (NYSE:WOW) but similarly valued. These stocks are Juniper Industrial Holdings, Inc. (NYSE:JIH), Cowen Inc. (NASDAQ:COWN), The First Bancshares, Inc. (NASDAQ:FBMS), Antares Pharma Inc (NASDAQ:ATRS), Geopark Ltd (NYSE:GPRK), Global Partners LP (NYSE:GLP), and Despegar.com, Corp. (NYSE:DESP). All of these stocks’ market caps are closest to WOW’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.1 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $17 million in WOW’s case. Juniper Industrial Holdings, Inc. (NYSE:JIH) is the most popular stock in this table. On the other hand Global Partners LP (NYSE:GLP) is the least popular one with only 2 bullish hedge fund positions. WideOpenWest, Inc. (NYSE:WOW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WOW is 32. 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 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 32.9% in 2020 through December 8th and still beat the market by 16.2 percentage points. A small number of hedge funds were also right about betting on WOW as the stock returned 66.5% since the end of the third quarter (through 12/8) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.