WD-40 Company (WDFC) Not Attracting Much Smart Money

The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S economic data. It was not entirely clear whether the broader market sell-off made U.S equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that the Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25th through October 30th, which clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. With that in mind, let’s take a glance at the smart money sentiment towards WD-40 Company (NASDAQ:WDFC) and see how it was affected.

WD-40 Company (NASDAQ:WDFC) has experienced an increase in hedge fund interest in recent months. WD-40 Company was in 7 hedge funds’ portfolios at the end of September. There were 6 hedge funds in our database with WD-40 Company positions at the end of the previous quarter. At the end of this article we will also compare WDFC to other stocks including RingCentral Inc (NYSE:RNG), Amedisys Inc (NASDAQ:AMED), and Alon USA Energy, Inc. (NYSE:ALJ) to get a better sense of its popularity.

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With all of this in mind, we’re going to go over the new action encompassing WD-40 Company (NASDAQ:WDFC).

What have hedge funds been doing with WD-40 Company (NASDAQ:WDFC)?

At the end of the third quarter, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a rise of 17% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies has the biggest position in WD-40 Company (NASDAQ:WDFC), worth close to $53.9 million, comprising 0.1% of its total 13F portfolio. The second-most bullish fund is GAMCO Investors, led by Mario Gabelli, holding a $3.8 million position; less than 0.1% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions encompass Tim Curro’s Value Holdings LP, Chuck Royce’s Royce & Associates, and Matthew Hulsizer’s PEAK6 Capital Management.

With general bullishness amongst the heavyweights, specific money managers have jumped into WD-40 Company (NASDAQ:WDFC) headfirst. Millennium Management, managed by Israel Englander, established the biggest position in WD-40 Company (NASDAQ:WDFC). Millennium Management had $0.3 million invested in the company at the end of the quarter.

Let’s also examine hedge fund activity in other stocks similar to WD-40 Company (NASDAQ:WDFC). These stocks are RingCentral Inc (NYSE:RNG), Amedisys Inc (NASDAQ:AMED), Alon USA Energy, Inc. (NYSE:ALJ), and World Wrestling Entertainment, Inc. (NYSE:WWE). This group of stocks’ market caps are closest to WD-40 Company’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RNG 29 193797 7
AMED 24 223659 5
ALJ 23 148603 5
WWE 21 110136 7

As you can see these stocks had an average of 24.25 hedge funds with bullish positions and the average amount invested in these stocks was $169 million. That figure was $62 million in WD-40 Company’s case. RingCentral Inc (NYSE:RNG) is the most popular stock in this table. On the other hand World Wrestling Entertainment, Inc. (NYSE:WWE) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks WD-40 Company (NASDAQ:WDFC) is even less popular than WWE. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock, as it doesn’t appear to be enticing many of the best investors in the world at this point.