Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Having said that, let’s take a closer look at the smart money activity surrounding Weatherford International Plc (NYSE:WFT). Overall, the stock didn’t see a lot of action last quarter and the hedge fund sentiment was unchanged. In this way, 31 funds tracked by Insider Monkey reported ownership of Weatherford International’s shares as of the end of September. At the end of this article we will also compare WFT to other stocks including First Solar, Inc. (NASDAQ:FSLR), Keysight Technologies Inc (NYSE:KEYS), and Sun Communities Inc (NYSE:SUI) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, we’re going to check out the new action regarding Weatherford International Plc (NYSE:WFT).
How have hedgies been trading Weatherford International Plc (NYSE:WFT)?
As mentioned at the beginning of this article, 31 funds from the Insider Monkey database were bullish on Weatherford International Plc (NYSE:WFT) at the end of September, unchanged over the quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of notable hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Dmitry Balyasny’s Balyasny Asset Management holds the largest position in Weatherford International Plc (NYSE:WFT). Balyasny Asset Management has a $138.3 million position in the stock, comprising 0.8% of its 13F portfolio. On Balyasny Asset Management’s heels is William B. Gray’s Orbis Investment Management, with a $91.2 million position; 0.6% of its 13F portfolio is allocated to the stock. Remaining members of the smart money that hold long positions comprise Anand Parekh’s Alyeska Investment Group, Mario Gabelli’s GAMCO Investors, and Kenneth Tropin’s Graham Capital Management.
On the other hand there were also a number of funds that decided to close their entire stakes in Weatherford International during the third quarter. Stuart J. Zimmer’s Zimmer Partners sold off the biggest investment of the 700 funds monitored by Insider Monkey, totaling about $33.3 million in call options. Kenneth Tropin’s fund, Graham Capital Management, also sold off its call options, about $8.3 million worth.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Weatherford International Plc (NYSE:WFT) but similarly valued. We will take a look at First Solar, Inc. (NASDAQ:FSLR), Keysight Technologies Inc (NYSE:KEYS), Sun Communities Inc (NYSE:SUI), and Senior Housing Properties Trust (NYSE:SNH). This group of stocks’ market valuations are similar to WFT’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $177 million, which is lower than the $588 million figure in WFT’s case. First Solar, Inc. (NASDAQ:FSLR) is the most popular stock in this table. On the other hand Senior Housing Properties Trust (NYSE:SNH) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Weatherford International Plc (NYSE:WFT) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.