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Is Wingstop Inc (WING) A Good Stock To Buy?

The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings discloses the funds’ positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Wingstop Inc (NASDAQ:WING) based on those filings.

Wingstop Inc (NASDAQ:WING) was in 10 hedge funds’ portfolios at the end of the third quarter of 2015. WING has seen a decrease in support from the world’s most elite money managers of late. There were 14 hedge funds in our database with WING holdings at the end of the previous quarter. 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 Manchester United PLC (NYSE:MANU), JinkoSolar Holding Co., Ltd. (NYSE:JKS), and CVR Partners LP (NYSE:UAN) to gather more data points.

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At the moment there are plenty of methods investors can use to analyze stocks. A pair of the less known methods are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the top money managers can beat their index-focused peers by a solid amount (see the details here).

Keeping this in mind, let’s take a gander at the recent action encompassing Wingstop Inc (NASDAQ:WING).

How are hedge funds trading Wingstop Inc (NASDAQ:WING)?

At the Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -29% from the second quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Passport Capital, managed by John Burbank, holds the largest position in Wingstop Inc (NASDAQ:WING). Passport Capital has a $6.8 million position in the stock, comprising 0.1% of its 13F portfolio. The second largest stake is held by Daniel Lascano’s Lomas Capital Management, with a $3.4 million position; the fund has 0.6% of its 13F portfolio invested in the stock. The remaining members of the smart money that are bullish contain Joel Ramin’s 12 West Capital Management, Richard Driehaus’ Driehaus Capital and Dmitry Balyasny’s Balyasny Asset Management.

Since Wingstop Inc (NASDAQ:WING) has experienced falling interest from the aggregate hedge fund industry, we can see that there exists a select few money managers that elected to cut their entire stakes heading into Q4. It’s worth mentioning that Gabriel Plotkin’s Melvin Capital Management dropped the biggest stake of the “upper crust” of funds watched by Insider Monkey, worth about $7.8 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund dumped about $3.8 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest dropped by 4 funds heading into Q4.

Let’s now review hedge fund activity in other stocks similar to Wingstop Inc (NASDAQ:WING). We will take a look at Manchester United PLC (NYSE:MANU), JinkoSolar Holding Co., Ltd. (NYSE:JKS), CVR Partners LP (NYSE:UAN), and Sierra Wireless, Inc. (USA) (NASDAQ:SWIR). This group of stocks’ market caps resemble WING’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MANU 9 92626 -1
JKS 6 46179 -6
UAN 5 2100 0
SWIR 9 17904 0

As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $40 million. That figure was $21 million in WING’s case. Manchester United PLC (NYSE:MANU) is the most popular stock in this table, since nine funds reported holding its shares as of the end of Septembber. On the other hand CVR Partners LP (NYSE:UAN) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Wingstop Inc (NASDAQ:WING) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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