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Were Hedge Funds Right About Flocking Into Wolverine World Wide, Inc. (WWW) ?

Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by more than 6 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Wolverine World Wide, Inc. (NYSE:WWW).

Wolverine World Wide, Inc. (NYSE:WWW) has experienced an increase in enthusiasm from smart money lately. Our calculations also showed that www isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

David Harding

Let’s analyze the latest hedge fund action regarding Wolverine World Wide, Inc. (NYSE:WWW).

How have hedgies been trading Wolverine World Wide, Inc. (NYSE:WWW)?

At the end of the first quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 58% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in WWW a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with WWW Positions

Among these funds, Royce & Associates held the most valuable stake in Wolverine World Wide, Inc. (NYSE:WWW), which was worth $49.5 million at the end of the first quarter. On the second spot was Citadel Investment Group which amassed $27.8 million worth of shares. Moreover, Winton Capital Management, Marshall Wace LLP, and GLG Partners were also bullish on Wolverine World Wide, Inc. (NYSE:WWW), allocating a large percentage of their portfolios to this stock.

Now, some big names were leading the bulls’ herd. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in Wolverine World Wide, Inc. (NYSE:WWW). Marshall Wace LLP had $7.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $1.3 million position during the quarter. The other funds with new positions in the stock are Minhua Zhang’s Weld Capital Management, Matthew Hulsizer’s PEAK6 Capital Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s now take a look at hedge fund activity in other stocks similar to Wolverine World Wide, Inc. (NYSE:WWW). We will take a look at Green Dot Corporation (NYSE:GDOT), Axon Enterprise, Inc. (NASDAQ:AAXN), Navistar International Corp (NYSE:NAV), and RLI Corp. (NYSE:RLI). This group of stocks’ market valuations resemble WWW’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
GDOT 27 233849 8
AAXN 19 247525 3
NAV 23 1335795 3
RLI 13 140748 1
Average 20.5 489479 3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.5 hedge funds with bullish positions and the average amount invested in these stocks was $489 million. That figure was $125 million in WWW’s case. Green Dot Corporation (NYSE:GDOT) is the most popular stock in this table. On the other hand RLI Corp. (NYSE:RLI) is the least popular one with only 13 bullish hedge fund positions. Wolverine World Wide, Inc. (NYSE:WWW) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately WWW wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WWW investors were disappointed as the stock returned -20.9% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in Q2.

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

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