Concerns over rising interest rates and expected further rate increases have hit several stocks hard since the end of the third quarter. NASDAQ and Russell 2000 indices are already in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by about 4 percentage points in the first half of the fourth quarter. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Welbilt, Inc. (NYSE:WBT).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let’s review the latest hedge fund action regarding Welbilt, Inc. (NYSE:WBT).
How are hedge funds trading Welbilt, Inc. (NYSE:WBT)?
Heading into the fourth quarter of 2018, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WBT over the last 13 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Select Equity Group held the most valuable stake in Welbilt, Inc. (NYSE:WBT), which was worth $288.2 million at the end of the third quarter. On the second spot was Icahn Capital LP which amassed $210.5 million worth of shares. Moreover, Impax Asset Management, Gates Capital Management, and Intermede Investment Partners were also bullish on Welbilt, Inc. (NYSE:WBT), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Ascend Capital, managed by Malcolm Fairbairn, initiated the most outsized position in Welbilt, Inc. (NYSE:WBT). Ascend Capital had $7 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also initiated a $1.5 million position during the quarter. The other funds with new positions in the stock are Sander Gerber’s Hudson Bay Capital Management, Andre F. Perold’s HighVista Strategies, and Brandon Haley’s Holocene Advisors.
Let’s now take a look at hedge fund activity in other stocks similar to Welbilt, Inc. (NYSE:WBT). We will take a look at FirstService Corporation (NASDAQ:FSV), Sunoco LP (NYSE:SUN), USANA Health Sciences, Inc. (NYSE:USNA), and CVR Refining LP (NYSE:CVRR). All of these stocks’ market caps match WBT’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $172 million. That figure was $813 million in WBT’s case. USANA Health Sciences, Inc. (NYSE:USNA) is the most popular stock in this table. On the other hand CVR Refining LP (NYSE:CVRR) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Welbilt, Inc. (NYSE:WBT) 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.
Disclosure: None. This article was originally published at Insider Monkey.