World Wrestling Entertainment, Inc. (WWE) Fell Out Of Favor With Hedge Funds

Hedge funds and large money managers usually invest with a focus on the long-term horizon and, therefore, short-lived dips or bumps on the charts usually don’t make them change their opinion towards a company. This time it may be different. The coronavirus pandemic destroyed the high correlations among major industries and asset classes. We are now in a stock pickers market where fundamentals of a stock have more effect on the price than the overall direction of the market. As a result we observe sudden and large changes in hedge fund positions depending on the news flow. Let’s take a look at the hedge fund sentiment towards World Wrestling Entertainment, Inc. (NYSE:WWE) to find out whether there were any major changes in hedge funds’ views.

World Wrestling Entertainment, Inc. (NYSE:WWE) shareholders have witnessed a decrease in support from the world’s most elite money managers lately. World Wrestling Entertainment, Inc. (NYSE:WWE) was in 25 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 47. There were 29 hedge funds in our database with WWE holdings at the end of December. Our calculations also showed that WWE isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was 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). So you can still find a lot of gems by following hedge funds’ moves today.

Jack Ripsteen Tim Ripsteen Potrero Capital

Jack Ripsteen of Potrero Capital Research

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. 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. Now let’s view the fresh hedge fund action encompassing World Wrestling Entertainment, Inc. (NYSE:WWE).

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

At the end of March, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WWE over the last 23 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in World Wrestling Entertainment, Inc. (NYSE:WWE) was held by Renaissance Technologies, which reported holding $56.4 million worth of stock at the end of December. It was followed by Solus Alternative Asset Management with a $33.8 million position. Other investors bullish on the company included Marathon Partners, AQR Capital Management, and Royce & Associates. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to World Wrestling Entertainment, Inc. (NYSE:WWE), around 13.47% of its 13F portfolio. 0 is also relatively very bullish on the stock, dishing out 12.4 percent of its 13F equity portfolio to WWE.

Because World Wrestling Entertainment, Inc. (NYSE:WWE) has faced bearish sentiment from hedge fund managers, it’s safe to say that there is a sect of money managers who were dropping their entire stakes heading into Q2. At the top of the heap, Eric Bannasch’s Cadian Capital dropped the largest investment of the “upper crust” of funds watched by Insider Monkey, worth close to $165.5 million in stock. Ricky Sandler’s fund, Eminence Capital, also dumped its stock, about $98 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds heading into Q2.

Let’s also examine hedge fund activity in other stocks similar to World Wrestling Entertainment, Inc. (NYSE:WWE). We will take a look at 51job, Inc. (NASDAQ:JOBS), UniFirst Corp (NYSE:UNF), PNM Resources, Inc. (NYSE:PNM), Axis Capital Holdings Limited (NYSE:AXS), Black Hills Corporation (NYSE:BKH), WD-40 Company (NASDAQ:WDFC), and Arena Pharmaceuticals, Inc. (NASDAQ:ARNA). All of these stocks’ market caps are similar to WWE’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
JOBS 18 126535 2
UNF 17 53080 2
PNM 26 720736 -4
AXS 23 596246 2
BKH 18 89974 -1
WDFC 14 176222 -1
ARNA 33 822587 -6
Average 21.3 369340 -0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 21.3 hedge funds with bullish positions and the average amount invested in these stocks was $369 million. That figure was $256 million in WWE’s case. Arena Pharmaceuticals, Inc. (NASDAQ:ARNA) is the most popular stock in this table. On the other hand WD-40 Company (NASDAQ:WDFC) is the least popular one with only 14 bullish hedge fund positions. World Wrestling Entertainment, Inc. (NYSE:WWE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WWE is 45.9. 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. 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 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 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately WWE wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on WWE were disappointed as the stock returned 4% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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