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Were Hedge Funds Right About Flocking Into W&T Offshore, Inc. (WTI) ?

At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.

W&T Offshore, Inc. (NYSE:WTI) was in 21 hedge funds’ portfolios at the end of the fourth quarter of 2018. WTI shareholders have witnessed an increase in hedge fund interest of late. There were 17 hedge funds in our database with WTI positions at the end of the previous quarter. Our calculations also showed that WTI isn’t among the 30 most popular stocks among hedge funds.

In today’s marketplace there are a lot of signals stock traders employ to appraise their holdings. A couple of the less utilized signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform their index-focused peers by a significant amount (see the details here).

Dmitry Balyasny

Let’s go over the key hedge fund action surrounding W&T Offshore, Inc. (NYSE:WTI).

What have hedge funds been doing with W&T Offshore, Inc. (NYSE:WTI)?

At Q4’s end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 24% from the second quarter of 2018. Below, you can check out the change in hedge fund sentiment towards WTI 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.


The largest stake in W&T Offshore, Inc. (NYSE:WTI) was held by Renaissance Technologies, which reported holding $29.3 million worth of stock at the end of December. It was followed by Millennium Management with a $8.9 million position. Other investors bullish on the company included Arrowstreet Capital, Two Sigma Advisors, and AQR Capital Management.

Consequently, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the largest position in W&T Offshore, Inc. (NYSE:WTI). Marshall Wace LLP had $1.2 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $1.1 million investment in the stock during the quarter. The other funds with brand new WTI positions are Hoon Kim’s Quantinno Capital, Dmitry Balyasny’s Balyasny Asset Management, and Alec Litowitz and Ross Laser’s Magnetar Capital.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as W&T Offshore, Inc. (NYSE:WTI) but similarly valued. We will take a look at Triumph Group Inc (NYSE:TGI), Blue Hills Bancorp Inc (NASDAQ:BHBK), HomeStreet Inc (NASDAQ:HMST), and Merchants Bancorp (NASDAQ:MBIN). This group of stocks’ market valuations match WTI’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TGI 8 16478 1
BHBK 7 19541 -2
HMST 7 6175 1
MBIN 4 5638 -4
Average 6.5 11958 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 6.5 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $57 million in WTI’s case. Triumph Group Inc (NYSE:TGI) is the most popular stock in this table. On the other hand Merchants Bancorp (NASDAQ:MBIN) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks W&T Offshore, Inc. (NYSE:WTI) is more popular among hedge funds. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on WTI as the stock returned 65.5% 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.

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

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