Should I Buy The Alkaline Water Company Inc. (WTER)?

In this article we will take a look at whether hedge funds think The Alkaline Water Company Inc. (NASDAQ:WTER) 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.

The Alkaline Water Company Inc. (NASDAQ:WTER) was in 3 hedge funds’ portfolios at the end of September. The all time high for this statistics is 4. WTER investors should be aware of an increase in support from the world’s most elite money managers of late. There were 2 hedge funds in our database with WTER positions at the end of the second quarter. Our calculations also showed that WTER 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 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.

William Harnisch

William Harnisch of Peconic Partners LLC

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 10 most profitable companies in the world 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. With all of this in mind we’re going to take a glance at the latest hedge fund action surrounding The Alkaline Water Company Inc. (NASDAQ:WTER).

How are hedge funds trading The Alkaline Water Company Inc. (NASDAQ:WTER)?

At third quarter’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 50% from the second quarter of 2020. By comparison, 1 hedge funds held shares or bullish call options in WTER 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.

The largest stake in The Alkaline Water Company Inc. (NASDAQ:WTER) was held by Renaissance Technologies, which reported holding $1.9 million worth of stock at the end of September. It was followed by Peconic Partners LLC with a $0.4 million position. The only other hedge fund that is bullish on the company was Millennium Management.

Now, specific money managers have jumped into The Alkaline Water Company Inc. (NASDAQ:WTER) headfirst. Millennium Management, managed by Israel Englander, established the most outsized position in The Alkaline Water Company Inc. (NASDAQ:WTER). Millennium Management had $0.3 million invested in the company at the end of the quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as The Alkaline Water Company Inc. (NASDAQ:WTER) but similarly valued. These stocks are Enlivex Therapeutics Ltd. (NASDAQ:ENLV), Corenergy Infrastructure Trust Inc (NYSE:CORR), DiaMedica Therapeutics Inc. (NASDAQ:DMAC), CF Bankshares Inc. (NASDAQ:CFBK), Hall of Fame Resort & Entertainment Company (NASDAQ:HOFV), Old Point Financial Corporation (NASDAQ:OPOF), and Limestone Bancorp, Inc. (NASDAQ:LMST). This group of stocks’ market caps resemble WTER’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ENLV 1 1773 -2
CORR 6 6885 -3
DMAC 10 22656 4
CFBK 1 3248 0
HOFV 3 457 3
OPOF 2 2006 -1
LMST 2 3897 0
Average 3.6 5846 0.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 3.6 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $3 million in WTER’s case. DiaMedica Therapeutics Inc. (NASDAQ:DMAC) is the most popular stock in this table. On the other hand Enlivex Therapeutics Ltd. (NASDAQ:ENLV) is the least popular one with only 1 bullish hedge fund positions. The Alkaline Water Company Inc. (NASDAQ:WTER) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WTER is 39.6. 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 negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 28.1% in 2020 through November 23rd and surpassed the market again by 15.4 percentage points. Unfortunately WTER wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WTER investors were disappointed as the stock returned -13.5% since the end of September (through 11/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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