Is WTFC A Good Stock To Buy Now?

In this article we will take a look at whether hedge funds think Wintrust Financial Corporation (NASDAQ:WTFC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Is WTFC a good stock to buy now? Wintrust Financial Corporation (NASDAQ:WTFC) was in 20 hedge funds’ portfolios at the end of September. The all time high for this statistic is 27. WTFC has experienced a decrease in hedge fund sentiment recently. There were 23 hedge funds in our database with WTFC positions at the end of the second quarter. Our calculations also showed that WTFC 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.


Ken Griffin of Citadel Investment Group

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 look at the key hedge fund action regarding Wintrust Financial Corporation (NASDAQ:WTFC).

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

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in WTFC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Fisher Asset Management was the largest shareholder of Wintrust Financial Corporation (NASDAQ:WTFC), with a stake worth $26.6 million reported as of the end of September. Trailing Fisher Asset Management was D E Shaw, which amassed a stake valued at $21 million. Citadel Investment Group, AQR Capital Management, and Arrowstreet 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 Mendon Capital Advisors allocated the biggest weight to Wintrust Financial Corporation (NASDAQ:WTFC), around 1.4% of its 13F portfolio. EJF Capital is also relatively very bullish on the stock, setting aside 0.29 percent of its 13F equity portfolio to WTFC.

Since Wintrust Financial Corporation (NASDAQ:WTFC) has faced falling interest from hedge fund managers, we can see that there is a sect of money managers that elected to cut their entire stakes last quarter. Intriguingly, Paul Marshall and Ian Wace’s Marshall Wace LLP dropped the largest investment of the “upper crust” of funds followed by Insider Monkey, totaling close to $11.5 million in stock, and Daniel Johnson’s Gillson Capital was right behind this move, as the fund sold off about $3.1 million worth. These transactions are important to note, as total hedge fund interest fell by 3 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Wintrust Financial Corporation (NASDAQ:WTFC). These stocks are Revolution Medicines, Inc. (NASDAQ:RVMD), Mercury General Corporation (NYSE:MCY), TreeHouse Foods Inc. (NYSE:THS), Focus Financial Partners Inc. (NASDAQ:FOCS), Apellis Pharmaceuticals, Inc. (NASDAQ:APLS), International Game Technology PLC (NYSE:IGT), and MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI). This group of stocks’ market valuations resemble WTFC’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RVMD 15 371222 2
MCY 21 152030 4
THS 30 189124 -2
FOCS 11 60571 2
APLS 29 515294 0
IGT 28 139844 5
MTSI 28 215078 5
Average 23.1 234738 2.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 23.1 hedge funds with bullish positions and the average amount invested in these stocks was $235 million. That figure was $113 million in WTFC’s case. TreeHouse Foods Inc. (NYSE:THS) is the most popular stock in this table. On the other hand Focus Financial Partners Inc. (NASDAQ:FOCS) is the least popular one with only 11 bullish hedge fund positions. Wintrust Financial Corporation (NASDAQ:WTFC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WTFC is 47.9. 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 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on WTFC as the stock returned 53.2% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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