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Did Hedge Funds Drop The Ball On Wheaton Precious Metals Corp. (WPM) ?

Reymerlyn Martin

Billionaire hedge fund managers such as David Abrams, Steve Cohen and Stan Druckenmiller can generate millions or even billions of dollars every year by pinning down high-potential small-cap stocks and pouring cash into these candidates. Small-cap stocks are overlooked by most investors, brokerage houses, and financial services hubs, while the unlimited research abilities of the big players within the hedge fund industry can easily identify the undervalued and high-potential stocks that reside the ignored corners of equity markets. There are numerous small-cap stocks that have turned out to be great winners, which is one of the main reasons the Insider Monkey team pays close attention to the hedge fund activity in relation to these stocks.

Wheaton Precious Metals Corp. (NYSE:WPM) has experienced a decrease in enthusiasm from smart money lately. Our calculations also showed that WPM isn't among the 30 most popular stocks among hedge funds.

In the 21st century investor’s toolkit there are many signals investors can use to analyze their stock investments. A pair of the best signals are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can outclass the S&P 500 by a solid amount (see the details here).

CITADEL INVESTMENT GROUP

Let's view the latest hedge fund action regarding Wheaton Precious Metals Corp. (NYSE:WPM).

What have hedge funds been doing with Wheaton Precious Metals Corp. (NYSE:WPM)?

At Q4's end, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WPM over the last 14 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

WPM_mar2019

Among these funds, Citadel Investment Group held the most valuable stake in Wheaton Precious Metals Corp. (NYSE:WPM), which was worth $71.4 million at the end of the third quarter. On the second spot was Kopernik Global Investors which amassed $59.7 million worth of shares. Moreover, Horizon Asset Management, Millennium Management, and Renaissance Technologies were also bullish on Wheaton Precious Metals Corp. (NYSE:WPM), allocating a large percentage of their portfolios to this stock.

Due to the fact that Wheaton Precious Metals Corp. (NYSE:WPM) has witnessed falling interest from hedge fund managers, we can see that there were a few funds that decided to sell off their entire stakes in the third quarter. Interestingly, Bernard Selz's Selz Capital dropped the largest investment of the "upper crust" of funds watched by Insider Monkey, valued at close to $11.7 million in stock, and D. E. Shaw's D E Shaw was right behind this move, as the fund cut about $6.2 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 funds in the third quarter.

Let's now review hedge fund activity in other stocks similar to Wheaton Precious Metals Corp. (NYSE:WPM). These stocks are Fidelity National Financial Inc (NYSE:FNF), Cenovus Energy Inc (NYSE:CVE), Melco Resorts & Entertainment Limited (NASDAQ:MLCO), and Herbalife Nutrition Ltd. (NYSE:HLF). This group of stocks' market values match WPM's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FNF,28,380210,-1 CVE,20,389711,7 MLCO,21,318428,-6 HLF,29,4017098,-9 Average,24.5,1276362,-2.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.5 hedge funds with bullish positions and the average amount invested in these stocks was $1276 million. That figure was $363 million in WPM's case. Herbalife Nutrition Ltd. (NYSE:HLF) is the most popular stock in this table. On the other hand Cenovus Energy Inc (NYSE:CVE) is the least popular one with only 20 bullish hedge fund positions. Wheaton Precious Metals Corp. (NYSE:WPM) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks among hedge funds returned 21.3% through April 8th and outperformed the S&P 500 ETF (SPY) by more than 5 percentage points. Hedge funds were also right about betting on WPM as the stock returned 22.6% and outperformed the market as well. You can see the entire list of these shrewd hedge funds here.

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

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