At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Wolverine World Wide, Inc. (NYSE:WWW).
Is Wolverine World Wide, Inc. (NYSE:WWW) a buy, sell, or hold? Prominent investors are taking a pessimistic view. The number of long hedge fund positions were cut by 1 lately. Our calculations also showed that WWW 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). WWW was in 22 hedge funds’ portfolios at the end of March. There were 23 hedge funds in our database with WWW positions at the end of the previous quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. 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 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. 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. With all of this in mind we’re going to check out the fresh hedge fund action regarding Wolverine World Wide, Inc. (NYSE:WWW).
Hedge fund activity in Wolverine World Wide, Inc. (NYSE:WWW)
At Q1’s end, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of -4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WWW over the last 18 quarters. With the smart money’s sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Ric Dillon’s Diamond Hill Capital has the largest position in Wolverine World Wide, Inc. (NYSE:WWW), worth close to $18.1 million, amounting to 0.1% of its total 13F portfolio. The second most bullish fund manager is Millennium Management, managed by Israel Englander, which holds a $11.1 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish contain Ken Griffin’s Citadel Investment Group, Chuck Royce’s Royce & Associates and Frederick DiSanto’s Ancora Advisors. In terms of the portfolio weights assigned to each position Ancora Advisors allocated the biggest weight to Wolverine World Wide, Inc. (NYSE:WWW), around 0.35% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, setting aside 0.21 percent of its 13F equity portfolio to WWW.
Because Wolverine World Wide, Inc. (NYSE:WWW) has faced a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few funds who sold off their full holdings heading into Q4. At the top of the heap, Paul Marshall and Ian Wace’s Marshall Wace LLP dropped the biggest stake of all the hedgies followed by Insider Monkey, valued at close to $11.8 million in stock. Michael Gelband’s fund, ExodusPoint Capital, also dumped its stock, about $0.7 million worth. These moves are interesting, as aggregate hedge fund interest dropped by 1 funds heading into Q4.
Let’s check out hedge fund activity in other stocks similar to Wolverine World Wide, Inc. (NYSE:WWW). We will take a look at MakeMyTrip Limited (NASDAQ:MMYT), Renasant Corporation (NASDAQ:RNST), LTC Properties Inc (NYSE:LTC), and International Game Technology PLC (NYSE:IGT). This group of stocks’ market caps are similar to WWW’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $33 million. That figure was $85 million in WWW’s case. International Game Technology PLC (NYSE:IGT) is the most popular stock in this table. On the other hand MakeMyTrip Limited (NASDAQ:MMYT) is the least popular one with only 9 bullish hedge fund positions. Wolverine World Wide, Inc. (NYSE:WWW) is not the most popular stock in this group but hedge fund interest is still above 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 13.9% in 2020 through June 10th but still beat the market by 14.2 percentage points. Hedge funds were also right about betting on WWW as the stock returned 63.7% in Q2 (through June 10th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.