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Hedge Funds Are Betting On The York Water Company (YORW)

Nina Todic

A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended September 30, so let’s proceed with the discussion of the hedge fund sentiment on The York Water Company (NASDAQ:YORW).

The York Water Company (NASDAQ:YORW) was in 7 hedge funds' portfolios at the end of the third quarter of 2019. YORW has seen an increase in hedge fund sentiment recently. There were 5 hedge funds in our database with YORW holdings at the end of the previous quarter. Our calculations also showed that YORW isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds
5 Most Popular Stocks Among Hedge Funds

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 Russell 2000 ETFs by 40 percentage points since May 2014 (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.

[caption id="attachment_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]

David Harding
David Harding

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. We're going to take a peek at the latest hedge fund action regarding The York Water Company (NASDAQ:YORW).

Hedge fund activity in The York Water Company (NASDAQ:YORW)

Heading into the fourth quarter of 2019, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of 40% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards YORW over the last 17 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in The York Water Company (NASDAQ:YORW) was held by Renaissance Technologies, which reported holding $13.4 million worth of stock at the end of September. It was followed by Royce & Associates with a $5.9 million position. Other investors bullish on the company included GAMCO Investors, Winton Capital Management, and Water Asset Management. In terms of the portfolio weights assigned to each position Water Asset Management allocated the biggest weight to The York Water Company (NASDAQ:YORW), around 0.91% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to YORW.

As aggregate interest increased, specific money managers were leading the bulls' herd. Winton Capital Management, managed by David Harding, initiated the most outsized position in The York Water Company (NASDAQ:YORW). Winton Capital Management had $0.8 million invested in the company at the end of the quarter. Matthew Hulsizer's PEAK6 Capital Management also initiated a $0.3 million position during the quarter. The following funds were also among the new YORW investors: John Overdeck and David Siegel's Two Sigma Advisors and Matthew Hulsizer's PEAK6 Capital Management.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as The York Water Company (NASDAQ:YORW) but similarly valued. We will take a look at Bank of Marin Bancorp (NASDAQ:BMRC), Viomi Technology Co., Ltd (NASDAQ:VIOT), McEwen Mining Inc (NYSE:MUX), and International Seaways, Inc. (NYSE:INSW). This group of stocks' market valuations are similar to YORW's market valuation.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BMRC,5,20218,0 VIOT,3,24469,0 MUX,4,5621,0 INSW,21,158072,6 Average,8.25,52095,1.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $52 million. That figure was $23 million in YORW's case. International Seaways, Inc. (NYSE:INSW) is the most popular stock in this table. On the other hand Viomi Technology Co., Ltd (NASDAQ:VIOT) is the least popular one with only 3 bullish hedge fund positions. The York Water Company (NASDAQ:YORW) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately YORW wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); YORW investors were disappointed as the stock returned 1.5% during the first two months of the fourth quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.

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

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