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Winnebago Industries, Inc. (WGO)’s Shares Rally, But Is The Hype Deserved?

Shares of Winnebago Industries, Inc. (NYSE:WGO) skyrocketed by 8.99% yesterday after the company posted stronger-than-expected fiscal 2015 third quarter financial results. The manufacturer of recreation vehicles reported revenues of $266.5 million for the quarter, a 7.6% growth compared to the revenues of $247.7 million achieved in the fiscal third quarter of 2014, and ahead of the estimates of $261 million. Winnebago Industries, Inc. (NYSE:WGO) announced net income of $11.5 million or earnings per share of $0.43, which were marginally higher than the year-over-year EPS of $0.42. Winnebago beat the market’s earnings expectations of $0.41 per share, while reporting higher revenue than the consensus estimate of $261.44 million. While performance was enhanced by improved shipping volume, the average unit price did fall. Another concern is that the company’s Class A motor homes experienced a significant backlog drop, by 28%, while the smaller motor homes of its Class C segment were up by 22% in its place.

Winnebago Industries, Inc. (NYSE:WGO)

Perhaps that’s why the smart money is turning less bullish on Winnebago. The number of bullish hedge fund bets were cut by four in recent months. Winnebago was in 13 hedge funds’ portfolios at the end of the first quarter of 2015,with net investments valued at $77.91 million. There were 17 hedge funds in our database with Winnebago positions at the end of the previous quarter, with aggregate investments standing at $78.41 million.

At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning over 142% and beating the market by more than 84 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.

We also track the activity of company insiders, who provide another valuable analytical tool with their own buying and selling activity in their company’s shares, with insider buying being a particularly noteworthy metric. In Winnebago’s case, there hasn’t been any insider activity in the company over the past six months.

Let’s take a look at the key hedge fund action surrounding Winnebago Industries, Inc. (NYSE:WGO).

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