Legendary investors such as Leon Cooperman and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don’t publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That’s why we analyze the activity of those successful funds in these small-cap stocks. In the following paragraphs, we analyze Wolverine World Wide, Inc. (NYSE:WWW) from the perspective of those successful funds.
Wolverine World Wide, Inc. (NYSE:WWW) was in 13 hedge funds’ portfolios at the end of the third quarter of 2016. WWW investors should pay attention to a decrease in activity from the world’s largest hedge funds in recent months. There were 14 hedge funds in our database with WWW positions 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 LogMeIn Inc (NASDAQ:LOGM), Sterling Bancorp (NYSE:STL), and Chemed Corporation (NYSE:CHE) to gather more data points.
We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year, involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs.
Now, we’re going to take a look at the recent action surrounding Wolverine World Wide, Inc. (NYSE:WWW).
How are hedge funds trading Wolverine World Wide, Inc. (NYSE:WWW)?
Heading into the fourth quarter of 2016, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a decline of 7% from the previous quarter. On the other hand, there were a total of 18 hedge funds with a bullish position in WWW at the beginning of this year. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Select Equity Group, led by Robert Joseph Caruso, holds the most valuable position in Wolverine World Wide, Inc. (NYSE:WWW). According to its latest 13F filing, the fund has a $49.9 million position in the stock, comprising 0.4% of its 13F portfolio. Coming in second is Royce & Associates, led by Chuck Royce, which holds a $49.9 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Remaining members of the smart money with similar optimism include D. E. Shaw’s D E Shaw, Ken Griffin’s Citadel Investment Group and Ira Unschuld’s Brant Point Investment Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
We already know that not all hedge funds are bullish on the stock and some hedge funds actually got rid of their positions entirely. Interestingly, Steve Cohen’s Point72 Asset Management got rid of the biggest position of the “upper crust” of funds monitored by Insider Monkey, valued at close to $20.4 million in stock. Alexander Mitchell’s fund, Scopus Asset Management, also dumped its stock, about $17.2 million worth of Wolverine shares.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Wolverine World Wide, Inc. (NYSE:WWW) but similarly valued. We will take a look at LogMeIn Inc (NASDAQ:LOGM), Sterling Bancorp (NYSE:STL), Chemed Corporation (NYSE:CHE), and Electronics For Imaging, Inc. (NASDAQ:EFII). This group of stocks’ market caps resemble WWW’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 16 hedge funds with bullish positions and the average amount invested in these stocks was $195 million. That figure was $135 million in WWW’s case. LogMeIn Inc (NASDAQ:LOGM) is the most popular stock in this table. On the other hand Electronics For Imaging, Inc. (NASDAQ:EFII) is the least popular one with only 10 bullish hedge fund positions. Wolverine World Wide, Inc. (NYSE:WWW) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard LOGM might be a better candidate to consider taking a long position in.