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Were Hedge Funds Right About Deserting Walgreens Boots Alliance Inc (WBA)?

We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article we look at what those investors think of Walgreens Boots Alliance Inc (NASDAQ:WBA).

Is Walgreens Boots Alliance Inc (NASDAQ:WBA) a buy, sell, or hold? The smart money is starting to invest back. The number of bullish hedge fund bets went up by 5 lately though the overall trend is still very bearish. Our calculations also showed that WBA isn’t among the 30 most popular stocks among hedge funds. WBA was in 39 hedge funds’ portfolios at the end of December. There were 34 hedge funds in our database with WBA holdings at the end of the previous quarter.

In the financial world there are plenty of gauges investors have at their disposal to analyze publicly traded companies. A pair of the most under-the-radar gauges are hedge fund and insider trading interest. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can trounce the broader indices by a solid amount (see the details here).

Tom Gayner

Let’s review the recent hedge fund action surrounding Walgreens Boots Alliance Inc (NASDAQ:WBA).

How are hedge funds trading Walgreens Boots Alliance Inc (NASDAQ:WBA)?

At the end of the fourth quarter, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in WBA over the last 14 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, Bill & Melinda Gates Foundation Trust held the most valuable stake in Walgreens Boots Alliance Inc (NASDAQ:WBA), which was worth $237.5 million at the end of the third quarter. On the second spot was Markel Gayner Asset Management which amassed $146.8 million worth of shares. Moreover, GLG Partners, D E Shaw, and AQR Capital Management were also bullish on Walgreens Boots Alliance Inc (NASDAQ:WBA), allocating a large percentage of their portfolios to this stock.

Consequently, some big names have jumped into Walgreens Boots Alliance Inc (NASDAQ:WBA) headfirst. Two Sigma Advisors, managed by John Overdeck and David Siegel, assembled the biggest position in Walgreens Boots Alliance Inc (NASDAQ:WBA). Two Sigma Advisors had $22.4 million invested in the company at the end of the quarter. Michael Platt and William Reeves’s BlueCrest Capital Mgmt. also initiated a $10 million position during the quarter. The following funds were also among the new WBA investors: D. E. Shaw’s D E Shaw, Matthew Hulsizer’s PEAK6 Capital Management, and John Brandmeyer’s Cognios Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Walgreens Boots Alliance Inc (NASDAQ:WBA) but similarly valued. These stocks are Mitsubishi UFJ Financial Group Inc (NYSE:MUFG), Enbridge Inc (NYSE:ENB), BlackRock, Inc. (NYSE:BLK), and Goldman Sachs Group, Inc. (NYSE:GS). This group of stocks’ market caps are similar to WBA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MUFG 9 72908 9
ENB 18 174780 -3
BLK 36 1065680 -4
GS 70 6344965 13
Average 33.25 1914583 3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.25 hedge funds with bullish positions and the average amount invested in these stocks was $1915 million. That figure was $1089 million in WBA’s case. Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand Mitsubishi UFJ Financial Group Inc (NYSE:MUFG) is the least popular one with only 9 bullish hedge fund positions. Walgreens Boots Alliance Inc (NASDAQ:WBA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 19.7% through March 15th and outperformed the S&P 500 ETF (SPY) by 6.6 percentage points. Unfortunately WBA wasn’t in this group. Hedge funds that bet on WBA were disappointed as the stock lost 7.8% and underperformed the market by a large margin. If you are interested in investing in large cap stocks, you should check out the top 15 hedge fund stocks as 13 of these outperformed the market.

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

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