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Were Hedge Funds Right About Flocking Into Waters Corporation (WAT) ?

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 Waters Corporation (NYSE:WAT).

Waters Corporation (NYSE:WAT) was in 32 hedge funds’ portfolios at the end of the fourth quarter of 2018. WAT investors should pay attention to an increase in activity from the world’s largest hedge funds in recent months. There were 23 hedge funds in our database with WAT positions at the end of the previous quarter. Our calculations also showed that WAT isn’t among the 30 most popular stocks among hedge funds.

To the average investor there are a large number of formulas shareholders use to analyze publicly traded companies. A couple of the most useful formulas are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace the broader indices by a superb margin (see the details here).

TUDOR INVESTMENT CORP

Let’s check out the new hedge fund action surrounding Waters Corporation (NYSE:WAT).

Hedge fund activity in Waters Corporation (NYSE:WAT)

Heading into the first quarter of 2019, a total of 32 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 39% from one quarter earlier. On the other hand, there were a total of 31 hedge funds with a bullish position in WAT a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

WAT_mar2019

More specifically, Bares Capital Management was the largest shareholder of Waters Corporation (NYSE:WAT), with a stake worth $169.9 million reported as of the end of September. Trailing Bares Capital Management was Renaissance Technologies, which amassed a stake valued at $142.6 million. Generation Investment Management, GLG Partners, and Select Equity Group were also very fond of the stock, giving the stock large weights in their portfolios.

As one would reasonably expect, key hedge funds have been driving this bullishness. Alyeska Investment Group, managed by Anand Parekh, created the biggest position in Waters Corporation (NYSE:WAT). Alyeska Investment Group had $43.6 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson’s Adage Capital Management also made a $11.5 million investment in the stock during the quarter. The other funds with brand new WAT positions are Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, Ray Dalio’s Bridgewater Associates, and Paul Tudor Jones’s Tudor Investment Corp.

Let’s also examine hedge fund activity in other stocks similar to Waters Corporation (NYSE:WAT). These stocks are Best Buy Co., Inc. (NYSE:BBY), Fortis Inc. (NYSE:FTS), Mettler-Toledo International Inc. (NYSE:MTD), and CenterPoint Energy, Inc. (NYSE:CNP). This group of stocks’ market caps are similar to WAT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BBY 23 630609 -4
FTS 14 253251 0
MTD 22 241720 6
CNP 33 1425407 -5
Average 23 637747 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $638 million. That figure was $894 million in WAT’s case. CenterPoint Energy, Inc. (NYSE:CNP) is the most popular stock in this table. On the other hand Fortis Inc. (NYSE:FTS) is the least popular one with only 14 bullish hedge fund positions. Waters Corporation (NYSE:WAT) 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. Hedge funds were also right about betting on WAT as the stock returned 29.9% and outperformed the market as well.

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

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