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Werner Enterprises, Inc. (WERN): Are Hedge Funds Right About This Stock?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Werner Enterprises, Inc. (NASDAQ:WERN).

Werner Enterprises, Inc. (NASDAQ:WERN) was in 17 hedge funds’ portfolios at the end of March. WERN investors should pay attention to a decrease in support from the world’s most elite money managers of late. There were 21 hedge funds in our database with WERN positions at the end of the previous quarter. Our calculations also showed that WERN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are a large number of tools stock market investors can use to appraise stocks. Two of the best tools are hedge fund and insider trading signals. We have shown that, historically, those who follow the best picks of the elite hedge fund managers can beat their index-focused peers by a significant amount (see the details here).

GOTHAM ASSET MANAGEMENT

Joel Greenblatt of Gotham Asset Management

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. 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 the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s check out the recent hedge fund action encompassing Werner Enterprises, Inc. (NASDAQ:WERN).

How have hedgies been trading Werner Enterprises, Inc. (NASDAQ:WERN)?

Heading into the second quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -19% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WERN over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were adding to their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in Werner Enterprises, Inc. (NASDAQ:WERN). AQR Capital Management has a $42.2 million position in the stock, comprising 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Citadel Investment Group, managed by Ken Griffin, which holds a $39.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other professional money managers that hold long positions contain Jonathan Barrett and Paul Segal’s Luminus Management, D. E. Shaw’s D E Shaw and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Luminus Management allocated the biggest weight to Werner Enterprises, Inc. (NASDAQ:WERN), around 2.6% of its 13F portfolio. 12th Street Asset Management is also relatively very bullish on the stock, setting aside 0.76 percent of its 13F equity portfolio to WERN.

Due to the fact that Werner Enterprises, Inc. (NASDAQ:WERN) has faced a decline in interest from hedge fund managers, we can see that there exists a select few funds that decided to sell off their positions entirely heading into Q4. Intriguingly, Michael Cowley’s Sandbar Asset Management said goodbye to the largest position of the 750 funds monitored by Insider Monkey, worth about $5.5 million in stock, and Noam Gottesman’s GLG Partners was right behind this move, as the fund cut about $3.1 million worth. These moves are important to note, as aggregate hedge fund interest dropped by 4 funds heading into Q4.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Werner Enterprises, Inc. (NASDAQ:WERN) but similarly valued. We will take a look at Cenovus Energy Inc (NYSE:CVE), Companhia Energetica de Minas Gerais (NYSE:CIG), Corporate Office Properties Trust (NYSE:OFC), and Manchester United PLC (NYSE:MANU). This group of stocks’ market values match WERN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CVE 24 102988 -7
CIG 10 20207 1
OFC 17 158054 -4
MANU 8 27822 -2
Average 14.75 77268 -3

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $77 million. That figure was $162 million in WERN’s case. Cenovus Energy Inc (NYSE:CVE) is the most popular stock in this table. On the other hand Manchester United PLC (NYSE:MANU) is the least popular one with only 8 bullish hedge fund positions. Werner Enterprises, Inc. (NASDAQ:WERN) 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 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 13.4% in 2020 through June 22nd but beat the market by 15.9 percentage points. Unfortunately WERN wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on WERN were disappointed as the stock returned 17% 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 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.

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