The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 817 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their September 30 holdings, data that is available nowhere else. Should you consider Wipro Limited (NYSE:WIT) for your portfolio? We’ll look to this invaluable collective wisdom for the answer.
Is WIT a good stock to buy now? Wipro Limited (NYSE:WIT) has experienced an increase in support from the world’s most elite money managers in recent months. Wipro Limited (NYSE:WIT) was in 9 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 14. Our calculations also showed that WIT 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 analyze the new hedge fund action surrounding Wipro Limited (NYSE:WIT).
Do Hedge Funds Think WIT Is A Good Stock To Buy Now?
At third quarter’s end, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 29% from the second quarter of 2020. By comparison, 12 hedge funds held shares or bullish call options in WIT a year ago. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Cliff Asness’s AQR Capital Management has the biggest position in Wipro Limited (NYSE:WIT), worth close to $46.1 million, accounting for 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Fisher Asset Management, managed by Ken Fisher, which holds a $22.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining peers that hold long positions encompass Renaissance Technologies, D. E. Shaw’s D E Shaw and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position AQR Capital Management allocated the biggest weight to Wipro Limited (NYSE:WIT), around 0.08% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to WIT.
As one would reasonably expect, key money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, established the most valuable position in Wipro Limited (NYSE:WIT). Citadel Investment Group had $0.7 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also initiated a $0.1 million position during the quarter. The only other fund with a brand new WIT position is Michael Gelband’s ExodusPoint Capital.
Let’s go over hedge fund activity in other stocks similar to Wipro Limited (NYSE:WIT). We will take a look at Motorola Solutions Inc (NYSE:MSI), Marvell Technology Group Ltd. (NASDAQ:MRVL), Franco-Nevada Corporation (NYSE:FNV), The Clorox Company (NYSE:CLX), Ford Motor Company (NYSE:F), Carrier Global Corporation (NYSE:CARR), and Hormel Foods Corporation (NYSE:HRL). This group of stocks’ market caps resemble WIT’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 36.1 hedge funds with bullish positions and the average amount invested in these stocks was $1184 million. That figure was $93 million in WIT’s case. Carrier Global Corporation (NYSE:CARR) is the most popular stock in this table. On the other hand Motorola Solutions Inc (NYSE:MSI) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Wipro Limited (NYSE:WIT) is even less popular than MSI. Our overall hedge fund sentiment score for WIT is 26.3. 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. Hedge funds clearly dropped the ball on WIT as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. 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 WIT as the stock returned 14.5% since Q3 (through December 8th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.