Is Winnebago Industries, Inc. (NYSE:WGO) the right pick for your portfolio? The smart money is in a bearish mood. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience
To most shareholders, hedge funds are assumed to be slow, outdated financial tools of years past. While there are over 8000 funds with their doors open today, we choose to focus on the leaders of this group, close to 450 funds. It is estimated that this group has its hands on the lion’s share of the hedge fund industry’s total asset base, and by paying attention to their best stock picks, we have unearthed a few investment strategies that have historically outpaced the broader indices. Our small-cap hedge fund strategy outstripped the S&P 500 index by 18 percentage points a year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have outperformed the S&P 500 index by 24 percentage points in 7 months (check out a sample of our picks).
Equally as beneficial, positive insider trading sentiment is another way to break down the stock market universe. There are lots of stimuli for an upper level exec to cut shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Plenty of empirical studies have demonstrated the impressive potential of this method if investors know what to do (learn more here).
Keeping this in mind, it’s important to take a gander at the latest action encompassing Winnebago Industries, Inc. (NYSE:WGO).
What does the smart money think about Winnebago Industries, Inc. (NYSE:WGO)?
At year’s end, a total of 12 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With hedge funds’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes significantly.
When looking at the hedgies we track, Chuck Royce’s Royce & Associates had the most valuable position in Winnebago Industries, Inc. (NYSE:WGO), worth close to $38 million, comprising 0.1% of its total 13F portfolio. Sitting at the No. 2 spot is Jeffrey Vinik of Vinik Asset Management, with a $9 million position; 0.2% of its 13F portfolio is allocated to the stock. Remaining hedgies with similar optimism include Jeffrey Gendell’s Tontine Asset Management, Thomas E. Claugus’s GMT Capital and Ken Griffin’s Citadel Investment Group.
Due to the fact that Winnebago Industries, Inc. (NYSE:WGO) has experienced a declination in interest from the aggregate hedge fund industry, it’s safe to say that there was a specific group of hedge funds who were dropping their full holdings last quarter. At the top of the heap, Ken Grossman and Glen Schneider’s SG Capital Management dumped the biggest investment of the “upper crust” of funds we key on, totaling an estimated $5 million in stock.. Joel Greenblatt’s fund, Gotham Asset Management, also sold off its stock, about $1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
What have insiders been doing with Winnebago Industries, Inc. (NYSE:WGO)?
Bullish insider trading is most useful when the company in focus has experienced transactions within the past six months. Over the latest half-year time frame, Winnebago Industries, Inc. (NYSE:WGO) has experienced 2 unique insiders buying, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to Winnebago Industries, Inc. (NYSE:WGO). These stocks are Polaris Industries Inc. (NYSE:PII), Thor Industries, Inc. (NYSE:THO), Drew Industries, Inc. (NYSE:DW), Federal Signal Corporation (NYSE:FSS), and Arctic Cat Inc (NASDAQ:ACAT). This group of stocks are the members of the recreational vehicles industry and their market caps are similar to WGO’s market cap.
|Company Name||# of Hedge Funds||# of Insiders Buying||# of Insiders Selling|
|Polaris Industries Inc. (NYSE:PII)||26||0||11|
|Thor Industries, Inc. (NYSE:THO)||15||1||1|
|Drew Industries, Inc. (NYSE:DW)||10||0||9|
|Federal Signal Corporation (NYSE:FSS)||9||1||0|
|Arctic Cat Inc (NASDAQ:ACAT)||13||2||3|
With the results demonstrated by our time-tested strategies, retail investors should always watch hedge fund and insider trading sentiment, and Winnebago Industries, Inc. (NYSE:WGO) applies perfectly to this mantra.