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Were Hedge Funds Right About Weis Markets, Inc. (WMK)?

Hedge funds don’t get the respect they used to get. Nowadays investors prefer passive funds over actively managed funds. One thing they don’t realize is that 100% of the passive funds didn’t see the coronavirus recession coming, but a lot of hedge funds did. Even we published an article near the end of February and predicted a US recession. Think about all the losses you could have avoided if you sold your shares in February and bought them back at the end of March.

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 835 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Weis Markets, Inc. (NYSE:WMK).

Weis Markets, Inc. (NYSE:WMK) was in 12 hedge funds’ portfolios at the end of December. WMK investors should pay attention to a decrease in hedge fund interest of late. There were 16 hedge funds in our database with WMK positions at the end of the previous quarter. Our calculations also showed that WMK 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).

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

We leave no stone unturned when looking for the next great investment idea. For example, this investor can predict short term winners following earnings announcements with high accuracy, so we check out his stock picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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 let’s take a look at the fresh hedge fund action encompassing Weis Markets, Inc. (NYSE:WMK).

What have hedge funds been doing with Weis Markets, Inc. (NYSE:WMK)?

At Q4’s end, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WMK over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is WMK A Good Stock To Buy?

The largest stake in Weis Markets, Inc. (NYSE:WMK) was held by Royce & Associates, which reported holding $21.2 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $9.6 million position. Other investors bullish on the company included Renaissance Technologies, GAMCO Investors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Weis Markets, Inc. (NYSE:WMK), around 0.61% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.29 percent of its 13F equity portfolio to WMK.

Judging by the fact that Weis Markets, Inc. (NYSE:WMK) has experienced falling interest from the entirety of the hedge funds we track, it’s safe to say that there exists a select few hedge funds who sold off their positions entirely by the end of the third quarter. Interestingly, Paul Marshall and Ian Wace’s Marshall Wace LLP said goodbye to the largest stake of the “upper crust” of funds monitored by Insider Monkey, valued at about $3.8 million in stock. Noam Gottesman’s fund, GLG Partners, also said goodbye to its stock, about $0.2 million worth. These moves are important to note, as total hedge fund interest dropped by 4 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Weis Markets, Inc. (NYSE:WMK) but similarly valued. These stocks are Abercrombie & Fitch Co. (NYSE:ANF), HudBay Minerals Inc Ord Shs (NYSE:HBM), Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC), and Omega Flex, Inc. (NASDAQ:OFLX). This group of stocks’ market caps resemble WMK’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ANF 26 334232 3
HBM 11 211228 -3
TRHC 6 25982 -5
OFLX 6 5185 1
Average 12.25 144157 -1

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $144 million. That figure was $50 million in WMK’s case. Abercrombie & Fitch Co. (NYSE:ANF) is the most popular stock in this table. On the other hand Tabula Rasa HealthCare, Inc. (NASDAQ:TRHC) is the least popular one with only 6 bullish hedge fund positions. Weis Markets, Inc. (NYSE:WMK) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but still beat the market by 12.9 percentage points. A small number of hedge funds were also right about betting on WMK as the stock returned 25.5% during the same time period and outperformed the market by an even larger margin.
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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