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Were Hedge Funds Right About Piling Into Winnebago Industries, Inc. (WGO)?

We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Winnebago Industries, Inc. (NYSE:WGO).

Winnebago Industries, Inc. (NYSE:WGO) was in 23 hedge funds’ portfolios at the end of December. WGO investors should pay attention to an increase in activity from the world’s largest hedge funds recently. There were 15 hedge funds in our database with WGO holdings at the end of the previous quarter. Our calculations also showed that WGO isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).

At the moment there are a lot of gauges investors employ to size up stocks. A couple of the less utilized gauges are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the elite hedge fund managers can outclass the market by a solid margin (see the details here).

Richard Driehaus of Driehaus Capital

We leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve and other Central Banks are tripping over each other to print more money. As a result, we believe gold stocks will outperform fixed income ETFs in the long-term. So we are checking out investment opportunities like this one. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences (by the way watch this video if you want to hear one of the best healthcare hedge fund manager’s coronavirus analysis). Our best call in 2020 was shorting the market when 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 take a look at the fresh hedge fund action surrounding Winnebago Industries, Inc. (NYSE:WGO).

How are hedge funds trading Winnebago Industries, Inc. (NYSE:WGO)?

At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 53% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in WGO a year ago. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

Among these funds, Punch Card Capital held the most valuable stake in Winnebago Industries, Inc. (NYSE:WGO), which was worth $73.7 million at the end of the third quarter. On the second spot was Royce & Associates which amassed $27.4 million worth of shares. Shellback Capital, Candlestick Capital Management, and Driehaus Capital 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 Punch Card Capital allocated the biggest weight to Winnebago Industries, Inc. (NYSE:WGO), around 30.67% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, dishing out 2.22 percent of its 13F equity portfolio to WGO.

Consequently, some big names have jumped into Winnebago Industries, Inc. (NYSE:WGO) headfirst. Shellback Capital, managed by Doug Gordon, Jon Hilsabeck and Don Jabro, assembled the largest position in Winnebago Industries, Inc. (NYSE:WGO). Shellback Capital had $19.9 million invested in the company at the end of the quarter. Jack Woodruff’s Candlestick Capital Management also initiated a $16.7 million position during the quarter. The other funds with new positions in the stock are Richard Driehaus’s Driehaus Capital, Dmitry Balyasny’s Balyasny Asset Management, and Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Winnebago Industries, Inc. (NYSE:WGO) but similarly valued. These stocks are Sogou Inc. (NYSE:SOGO), LTC Properties Inc (NYSE:LTC), Cavco Industries, Inc. (NASDAQ:CVCO), and NBT Bancorp Inc. (NASDAQ:NBTB). This group of stocks’ market values are similar to WGO’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SOGO 11 13397 7
LTC 10 36725 0
CVCO 20 170519 -1
NBTB 7 13039 1
Average 12 58420 1.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $58 million. That figure was $231 million in WGO’s case. Cavco Industries, Inc. (NASDAQ:CVCO) is the most popular stock in this table. On the other hand NBT Bancorp Inc. (NASDAQ:NBTB) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Winnebago Industries, Inc. (NYSE:WGO) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th and still beat the market by 4.2 percentage points. Unfortunately WGO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on WGO were disappointed as the stock returned -42.2% during the three months of 2020 (through April 6th) 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 most of these stocks already outperformed the market in 2020.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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

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