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Welbilt, Inc. (WBT): Hedge Funds Taking Some Chips Off The Table

In this article we will take a look at whether hedge funds think Welbilt, Inc. (NYSE:WBT) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

Welbilt, Inc. (NYSE:WBT) was in 25 hedge funds’ portfolios at the end of March. WBT investors should pay attention to a decrease in hedge fund sentiment in recent months. There were 28 hedge funds in our database with WBT holdings at the end of the previous quarter. Our calculations also showed that WBT isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

If you’d ask most investors, hedge funds are assumed to be slow, outdated financial vehicles of yesteryear. While there are over 8000 funds in operation at the moment, Our researchers choose to focus on the upper echelon of this club, around 850 funds. These investment experts shepherd bulk of the hedge fund industry’s total asset base, and by paying attention to their highest performing investments, Insider Monkey has come up with a number of investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

Jeffrey Gates of Gates Capital

We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like these. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to check out the key hedge fund action encompassing Welbilt, Inc. (NYSE:WBT).

Hedge fund activity in Welbilt, Inc. (NYSE:WBT)

At Q1’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -11% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WBT over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Icahn Capital LP was the largest shareholder of Welbilt, Inc. (NYSE:WBT), with a stake worth $61.3 million reported as of the end of September. Trailing Icahn Capital LP was Impax Asset Management, which amassed a stake valued at $56.7 million. Gates Capital Management, Adage Capital Management, and Renaissance Technologies were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Gates Capital Management allocated the biggest weight to Welbilt, Inc. (NYSE:WBT), around 1.84% of its 13F portfolio. 13D Management is also relatively very bullish on the stock, earmarking 1.74 percent of its 13F equity portfolio to WBT.

Judging by the fact that Welbilt, Inc. (NYSE:WBT) has witnessed a decline in interest from hedge fund managers, we can see that there exists a select few funds that slashed their entire stakes in the first quarter. Interestingly, Matt Sirovich and Jeremy Mindich’s Scopia Capital said goodbye to the largest stake of all the hedgies followed by Insider Monkey, valued at close to $43.5 million in stock. Barry Dargan’s fund, Intermede Investment Partners, also dropped its stock, about $34.6 million worth. These moves are important to note, as total hedge fund interest fell by 3 funds in the first quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Welbilt, Inc. (NYSE:WBT) but similarly valued. These stocks are Kearny Financial Corp. (NASDAQ:KRNY), Omeros Corporation (NASDAQ:OMER), Heritage Financial Corporation (NASDAQ:HFWA), and Aprea Therapeutics, Inc. (NASDAQ:APRE). This group of stocks’ market valuations are closest to WBT’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KRNY 15 74519 -6
OMER 9 125041 2
HFWA 6 12043 0
APRE 6 159769 1
Average 9 92843 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $198 million in WBT’s case. Kearny Financial Corp. (NASDAQ:KRNY) is the most popular stock in this table. On the other hand Heritage Financial Corporation (NASDAQ:HFWA) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Welbilt, Inc. (NYSE:WBT) is more popular among hedge funds. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on WBT as the stock returned 34.9% so far in Q2 (through June 10th) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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Disclosure: None. This article was originally published at Insider Monkey.