In this article we will analyze whether WesBanco, Inc. (NASDAQ:WSBC) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.
Is WSBC a good stock to buy now? The smart money was turning bullish. The number of bullish hedge fund bets rose by 1 recently. WesBanco, Inc. (NASDAQ:WSBC) was in 14 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 13. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WSBC 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). There were 13 hedge funds in our database with WSBC holdings at the end of June.
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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. Keeping this in mind we’re going to take a glance at the recent hedge fund action surrounding WesBanco, Inc. (NASDAQ:WSBC).
Do Hedge Funds Think WSBC Is A Good Stock To Buy Now?
At the end of the third quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in WSBC a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in WesBanco, Inc. (NASDAQ:WSBC), which was worth $13 million at the end of the third quarter. On the second spot was Millennium Management which amassed $7.7 million worth of shares. EJF Capital, Elizabeth Park Capital Management, and Basswood Capital 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 Elizabeth Park Capital Management allocated the biggest weight to WesBanco, Inc. (NASDAQ:WSBC), around 3.36% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, designating 0.44 percent of its 13F equity portfolio to WSBC.
As aggregate interest increased, key hedge funds have jumped into WesBanco, Inc. (NASDAQ:WSBC) headfirst. Elizabeth Park Capital Management, managed by Fred Cummings, assembled the biggest position in WesBanco, Inc. (NASDAQ:WSBC). Elizabeth Park Capital Management had $5.1 million invested in the company at the end of the quarter. Michael Gelband’s ExodusPoint Capital also made a $1.8 million investment in the stock during the quarter. The following funds were also among the new WSBC investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Dmitry Balyasny’s Balyasny Asset Management, and Cliff Asness’s AQR Capital Management.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as WesBanco, Inc. (NASDAQ:WSBC) but similarly valued. These stocks are Generation Bio Co. (NASDAQ:GBIO), McGrath RentCorp (NASDAQ:MGRC), Niu Technologies (NASDAQ:NIU), Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), RLJ Lodging Trust (NYSE:RLJ), Azure Power Global Limited (NYSE:AZRE), and Industrial Logistics Properties Trust (NASDAQ:ILPT). This group of stocks’ market caps are similar to WSBC’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
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As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $101 million. That figure was $44 million in WSBC’s case. Sinclair Broadcast Group, Inc. (NASDAQ:SBGI) is the most popular stock in this table. On the other hand Azure Power Global Limited (NYSE:AZRE) is the least popular one with only 4 bullish hedge fund positions. WesBanco, Inc. (NASDAQ:WSBC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WSBC is 67.3. 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. 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. Hedge funds were also right about betting on WSBC as the stock returned 42.6% since the end of Q3 (through 12/8) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.