Should I Buy WESCO International, Inc. (WCC)?

Is WESCO International, Inc. (NYSE:WCC) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is WESCO International, Inc. (NYSE:WCC) a buy, sell, or hold? Money managers were in a bullish mood. The number of long hedge fund positions increased by 5 lately. WESCO International, Inc. (NYSE:WCC) was in 28 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 34. Our calculations also showed that WCC isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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 115 percentage points since March 2017 (see the details here). 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, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. 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 homepage. Now we’re going to analyze the recent hedge fund action encompassing WESCO International, Inc. (NYSE:WCC).

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

At Q1’s end, a total of 28 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 22% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WCC over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is WCC A Good Stock To Buy?

The largest stake in WESCO International, Inc. (NYSE:WCC) was held by Leonard Green & Partners, which reported holding $493.2 million worth of stock at the end of December. It was followed by Diamond Hill Capital with a $195.2 million position. Other investors bullish on the company included Peconic Partners LLC, Arrowstreet Capital, and Adage Capital Management. In terms of the portfolio weights assigned to each position Peconic Partners LLC allocated the biggest weight to WESCO International, Inc. (NYSE:WCC), around 15.8% of its 13F portfolio. Leonard Green & Partners is also relatively very bullish on the stock, designating 6.31 percent of its 13F equity portfolio to WCC.

Now, key money managers have been driving this bullishness. Adage Capital Management, managed by Phill Gross and Robert Atchinson, established the largest position in WESCO International, Inc. (NYSE:WCC). Adage Capital Management had $34.4 million invested in the company at the end of the quarter. Chuck Royce’s Royce & Associates also made a $27.5 million investment in the stock during the quarter. The other funds with brand new WCC positions are Clint Murray’s Lodge Hill Capital, Israel Englander’s Millennium Management, and Asad Rahman and Aman Kapadia’s Akaris Global Partners.

Let’s now review hedge fund activity in other stocks similar to WESCO International, Inc. (NYSE:WCC). We will take a look at Cricut, Inc. (NASDAQ:CRCT), Medallia, Inc. (NYSE:MDLA), Canada Goose Holdings Inc. (NYSE:GOOS), Madison Square Garden Sports Corp. (NYSE:MSGS), Avient Corporation (NYSE:AVNT), Wintrust Financial Corporation (NASDAQ:WTFC), and Innovative Industrial Properties, Inc. (NYSE:IIPR). This group of stocks’ market caps resemble WCC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CRCT 12 45232 12
MDLA 19 296296 -2
GOOS 19 207847 0
MSGS 47 934404 3
AVNT 24 232031 7
WTFC 19 176919 0
IIPR 13 192649 -10
Average 21.9 297911 1.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.9 hedge funds with bullish positions and the average amount invested in these stocks was $298 million. That figure was $1027 million in WCC’s case. Madison Square Garden Sports Corp. (NYSE:MSGS) is the most popular stock in this table. On the other hand Cricut, Inc. (NASDAQ:CRCT) is the least popular one with only 12 bullish hedge fund positions. WESCO International, Inc. (NYSE:WCC) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WCC is 57.6. 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. 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 24% in 2021 through July 9th and still beat the market by 6.7 percentage points. Hedge funds were also right about betting on WCC as the stock returned 20.3% since the end of Q1 (through 7/9) 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.