WNS (Holdings) Limited (WNS) Fell Out Of Favor With Hedge Funds

Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about WNS (Holdings) Limited (NYSE:WNS) in this article.

WNS (Holdings) Limited (NYSE:WNS) was in 21 hedge funds’ portfolios at the end of March. The all time high for this statistic is 23. WNS investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 23 hedge funds in our database with WNS positions at the end of the fourth quarter. Our calculations also showed that WNS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

Matthew Hulsizer PEAK6 Capital

Matthew Hulsizer of PEAK6 Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Keeping this in mind we’re going to check out the fresh hedge fund action regarding WNS (Holdings) Limited (NYSE:WNS).

Do Hedge Funds Think WNS Is A Good Stock To Buy Now?

At first quarter’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WNS over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is WNS A Good Stock To Buy?

Among these funds, Renaissance Technologies held the most valuable stake in WNS (Holdings) Limited (NYSE:WNS), which was worth $83.1 million at the end of the fourth quarter. On the second spot was Diamond Hill Capital which amassed $61.6 million worth of shares. GLG Partners, Arrowstreet Capital, and Fisher Asset Management 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 0 allocated the biggest weight to WNS (Holdings) Limited (NYSE:WNS), around 3.63% of its 13F portfolio. 0 is also relatively very bullish on the stock, earmarking 2.61 percent of its 13F equity portfolio to WNS.

Due to the fact that WNS (Holdings) Limited (NYSE:WNS) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few funds that decided to sell off their full holdings last quarter. Interestingly, Vikas Lunia’s Lunia Capital dropped the largest stake of the 750 funds watched by Insider Monkey, worth about $9.3 million in stock. Mark Coe’s fund, Intrinsic Edge Capital, also dumped its stock, about $5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks similar to WNS (Holdings) Limited (NYSE:WNS). We will take a look at Veracyte Inc (NASDAQ:VCYT), Yalla Group Limited (NYSE:YALA), Riot Blockchain, Inc (NASDAQ:RIOT), Agios Pharmaceuticals Inc (NASDAQ:AGIO), Viavi Solutions Inc (NASDAQ:VIAV), LivaNova PLC (NASDAQ:LIVN), and Texas Capital Bancshares Inc (NASDAQ:TCBI). This group of stocks’ market values match WNS’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
VCYT 19 636621 4
YALA 10 26724 1
RIOT 12 112604 5
AGIO 22 547051 -4
VIAV 28 281525 1
LIVN 28 694228 -2
TCBI 29 300284 19
Average 21.1 371291 3.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.1 hedge funds with bullish positions and the average amount invested in these stocks was $371 million. That figure was $261 million in WNS’s case. Texas Capital Bancshares Inc (NASDAQ:TCBI) is the most popular stock in this table. On the other hand Yalla Group Limited (NYSE:YALA) is the least popular one with only 10 bullish hedge fund positions. WNS (Holdings) Limited (NYSE:WNS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WNS is 59.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and beat the market by 7.7 percentage points. A small number of hedge funds were also right about betting on WNS, though not to the same extent, as the stock returned 9.9% since the end of Q1 (through July 16th) and outperformed the market.

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