Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards Willis Towers Watson Public Limited Company (NASDAQ:WLTW) to find out whether there were any major changes in hedge funds’ views.
Is WLTW stock a buy or sell? Willis Towers Watson Public Limited Company (NASDAQ:WLTW) was in 58 hedge funds’ portfolios at the end of December. The all time high for this statistic is 51. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. WLTW has seen an increase in enthusiasm from smart money recently. There were 51 hedge funds in our database with WLTW positions at the end of the third quarter. Our calculations also showed that WLTW isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
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Do Hedge Funds Think WLTW Is A Good Stock To Buy Now?
At the end of December, a total of 58 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the previous quarter. By comparison, 35 hedge funds held shares or bullish call options in WLTW a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Cantillon Capital Management, managed by William von Mueffling, holds the largest position in Willis Towers Watson Public Limited Company (NASDAQ:WLTW). Cantillon Capital Management has a $491.5 million position in the stock, comprising 3.7% of its 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $293.6 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining peers that are bullish include David Abrams’s Abrams Capital Management, Farallon Capital and Alec Litowitz and Ross Laser’s Magnetar Capital. In terms of the portfolio weights assigned to each position Hunting Hill Global Capital allocated the biggest weight to Willis Towers Watson Public Limited Company (NASDAQ:WLTW), around 22.6% of its 13F portfolio. Havens Advisors is also relatively very bullish on the stock, setting aside 8.99 percent of its 13F equity portfolio to WLTW.
There weren’t any hedge funds initiating brand new positions in the stock during the fourth quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Willis Towers Watson Public Limited Company (NASDAQ:WLTW) but similarly valued. We will take a look at Mettler-Toledo International Inc. (NYSE:MTD), Sirius XM Holdings Inc (NASDAQ:SIRI), AutoZone, Inc. (NYSE:AZO), Welltower Inc. (NYSE:WELL), Waste Connections, Inc. (NYSE:WCN), Marathon Petroleum Corp (NYSE:MPC), and Zscaler, Inc. (NASDAQ:ZS). All of these stocks’ market caps match WLTW’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 34.9 hedge funds with bullish positions and the average amount invested in these stocks was $1032 million. That figure was $3246 million in WLTW’s case. AutoZone, Inc. (NYSE:AZO) is the most popular stock in this table. On the other hand Welltower Inc. (NYSE:WELL) is the least popular one with only 26 bullish hedge fund positions. Compared to these stocks Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is more popular among hedge funds. Our overall hedge fund sentiment score for WLTW is 90. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately WLTW wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on WLTW were disappointed as the stock returned 4.4% since the end of the fourth quarter (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.