Should You Buy Willis Towers Watson PLC (WLTW)?

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips on the charts, usually don’t make them change their opinion towards a company. The second half of 2015 and the first few months of this year was a stressful period for hedge funds. However, things have been taking a turn for the better in the second half of this year. Small-cap stocks which hedge funds are usually overweight outperformed the market by double digits and it may be a good time to pay attention to hedge funds’ picks before it is too late. In this article we are going to analyze the hedge fund sentiment towards Willis Towers Watson PLC (NASDAQ:WLTW) .

Willis Towers Watson PLC (NASDAQ:WLTW) has seen an increase in activity from the world’s largest hedge funds lately. WLTW was in 41 hedge funds’ portfolios at the end of the third quarter of 2016. There were 39 hedge funds in our database with WLTW holdings at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Brown-Forman Corporation (NYSE:BF), M&T Bank Corporation (NYSE:MTB), and Concho Resources Inc. (NYSE:CXO) to gather more data points.

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What have hedge funds been doing with Willis Towers Watson PLC (NASDAQ:WLTW)?

At Q3’s end, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a rise of 5% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in WLTW over the last 5 quarters. With hedgies’ capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Jeffrey Ubben’s ValueAct Capital has the number one position in Willis Towers Watson PLC (NASDAQ:WLTW), worth close to $1.08 billion, corresponding to 9.4% of its total 13F portfolio. Sitting at the No. 2 spot is Cantillon Capital Management, led by William von Mueffling, which holds a $437.1 million position; the fund has 6.2% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions contain Ric Dillon’s Diamond Hill Capital, Barry Rosenstein’s JANA Partners and Scott McLellan’s Marble Arch Investments. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

With a general bullishness amongst the heavyweights, key money managers were breaking ground themselves. Roystone Capital Partners, led by Richard Barrera, established the most valuable position in Willis Towers Watson PLC (NASDAQ:WLTW). Roystone Capital Partners had $57.8 million invested in the company at the end of the quarter. Larry Robbins’s Glenview Capital also initiated a $35.6 million position during the quarter. The following funds were also among the new WLTW investors: Israel Englander’s Millennium Management, Alex Duran and Scott Hendrickson’s Permian Investment Partners, and Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management.

Let’s now review hedge fund activity in other stocks similar to Willis Towers Watson PLC (NASDAQ:WLTW). We will take a look at Brown-Forman Corporation (NYSE:BF), M&T Bank Corporation (NYSE:MTB), Concho Resources Inc. (NYSE:CXO), and Ecopetrol S.A. (ADR) (NYSE:EC). This group of stocks’ market values are similar to WLTW’s market value.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $543 million. That figure was $3.29 billion in WLTW’s case. Concho Resources Inc. (NYSE:CXO) is the most popular stock in this table. On the other hand Ecopetrol S.A. (ADR) (NYSE:EC) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Willis Towers Watson PLC (NASDAQ:WLTW) 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