Is WABCO Holdings Inc. (NYSE:WBC) undervalued? The smart money is reducing their bets on the stock. The number of long hedge fund positions stayed the same which is a slightly negative development in our experience
In the 21st century investor’s toolkit, there are tons of metrics market participants can use to watch stocks. A couple of the best are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the top fund managers can trounce their index-focused peers by a superb amount (see just how much).
Just as beneficial, optimistic insider trading sentiment is a second way to break down the marketplace. Obviously, there are a number of motivations for a bullish insider to sell shares of his or her company, but only one, very obvious reason why they would initiate a purchase. Plenty of academic studies have demonstrated the valuable potential of this strategy if “monkeys” understand where to look (learn more here).
Now, let’s take a peek at the key action encompassing WABCO Holdings Inc. (NYSE:WBC).
What does the smart money think about WABCO Holdings Inc. (NYSE:WBC)?
In preparation for this year, a total of 30 of the hedge funds we track were bullish in this stock, a change of 0% from the previous quarter. With the smart money’s capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully.
According to our comprehensive database, Berkshire Hathaway, managed by Warren Buffett, holds the most valuable position in WABCO Holdings Inc. (NYSE:WBC). Berkshire Hathaway has a $265.4 million position in the stock, comprising 0.4% of its 13F portfolio. The second largest stake is held by Stephen Mandel of Lone Pine Capital, with a $229.1 million position; 1.4% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Alan Fournier’s Pennant Capital Management, John Griffin’s Blue Ridge Capital and Phill Gross and Robert Atchinson’s Adage Capital Management.
Due to the fact that WABCO Holdings Inc. (NYSE:WBC) has experienced declining sentiment from the smart money, logic holds that there was a specific group of hedgies who were dropping their positions entirely last quarter. At the top of the heap, Jeffrey Tannenbaum’s Fir Tree dumped the largest stake of the “upper crust” of funds we key on, valued at close to $106.3 million in stock.. Robert Rodriguez and Steven Romick’s fund, First Pacific Advisors LLC, also cut its stock, about $49.5 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
How are insiders trading WABCO Holdings Inc. (NYSE:WBC)?
Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past half-year. Over the last six-month time period, WABCO Holdings Inc. (NYSE:WBC) has seen zero unique insiders purchasing, and 7 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to WABCO Holdings Inc. (NYSE:WBC). These stocks are TRW Automotive Holdings Corp. (NYSE:TRW), Visteon Corp (NYSE:VC), LKQ Corporation (NASDAQ:LKQ), Lear Corporation (NYSE:LEA), and Allison Transmission Holdings Inc (NYSE:ALSN). This group of stocks are in the auto parts industry and their market caps are similar to WBC’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|TRW Automotive Holdings Corp. (NYSE:TRW)||23||0||8|
|Visteon Corp (NYSE:VC)||39||3||4|
|LKQ Corporation (NASDAQ:LKQ)||14||1||7|
|Lear Corporation (NYSE:LEA)||37||0||6|
|Allison Transmission Holdings Inc (NYSE:ALSN)||7||0||11|
With the results exhibited by our strategies, retail investors should always pay attention to hedge fund and insider trading activity, and WABCO Holdings Inc. (NYSE:WBC) applies perfectly to this mantra.