Is Wolverine World Wide, Inc. (WWW) Going to Burn These Hedge Funds?

Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Wolverine World Wide, Inc. (NYSE:WWW).

Hedge fund interest in Wolverine World Wide, Inc. (NYSE:WWW) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that WWW isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). 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 National Health Investors Inc (NYSE:NHI), FuelCell Energy, Inc. (NASDAQ:FCEL), and The Cheesecake Factory Incorporated (NASDAQ:CAKE) to gather more data points.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. With all of this in mind we’re going to take a look at the fresh hedge fund action encompassing Wolverine World Wide, Inc. (NYSE:WWW).

Do Hedge Funds Think WWW Is A Good Stock To Buy Now?

At Q3’s end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WWW over the last 25 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Is WWW A Good Stock To Buy?

Among these funds, Citadel Investment Group held the most valuable stake in Wolverine World Wide, Inc. (NYSE:WWW), which was worth $21.4 million at the end of the third quarter. On the second spot was GLG Partners which amassed $18 million worth of shares. Arrowstreet Capital, Millennium Management, and Ancora Advisors were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Wolverine World Wide, Inc. (NYSE:WWW), around 0.37% of its 13F portfolio. Sciencast Management is also relatively very bullish on the stock, dishing out 0.11 percent of its 13F equity portfolio to WWW.

Seeing as Wolverine World Wide, Inc. (NYSE:WWW) has witnessed a decline in interest from the smart money, it’s easy to see that there is a sect of fund managers who were dropping their positions entirely by the end of the third quarter. Interestingly, Matthew Stadelman’s Diamond Hill Capital dropped the largest position of the 750 funds followed by Insider Monkey, totaling close to $33.1 million in stock, and Renee Yao’s Neo Ivy Capital was right behind this move, as the fund dumped about $0.4 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Wolverine World Wide, Inc. (NYSE:WWW) but similarly valued. These stocks are National Health Investors Inc (NYSE:NHI), FuelCell Energy, Inc. (NASDAQ:FCEL), The Cheesecake Factory Incorporated (NASDAQ:CAKE), Sterling Check Corp. (NASDAQ:STER), WSFS Financial Corporation (NASDAQ:WSFS), Enviva Partners, LP (NYSE:EVA), and Winnebago Industries, Inc. (NYSE:WGO). All of these stocks’ market caps match WWW’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
NHI 15 19189 2
FCEL 19 100272 5
CAKE 20 171595 -6
STER 22 83549 22
WSFS 10 79352 -1
EVA 8 341707 -1
WGO 24 357955 0
Average 16.9 164803 3

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.9 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $114 million in WWW’s case. Winnebago Industries, Inc. (NYSE:WGO) is the most popular stock in this table. On the other hand Enviva Partners, LP (NYSE:EVA) is the least popular one with only 8 bullish hedge fund positions. Wolverine World Wide, Inc. (NYSE:WWW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WWW is 73. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 and beat the market again by 3.6 percentage points. Unfortunately WWW wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WWW were disappointed as the stock returned -3.1% since the end of September (through 12/31) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.