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Hedge Funds Are Cashing Out Of Winnebago Industries, Inc. (WGO)

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Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 6 years and analyze what the smart money thinks of Winnebago Industries, Inc. (NYSE:WGO) based on that data.

Is Winnebago Industries, Inc. (NYSE:WGO) going to take off soon? The smart money was getting less bullish. The number of long hedge fund bets dropped by 6 in recent months. Winnebago Industries, Inc. (NYSE:WGO) was in 24 hedge funds' portfolios at the end of June. The all time high for this statistic is 33. Our calculations also showed that WGO isn't among the 30 most popular stocks among hedge funds (click for Q2 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 79 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.

Chuck Royce
Chuck Royce

Chuck Royce of Royce & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV 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 view the key hedge fund action regarding Winnebago Industries, Inc. (NYSE:WGO).

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

At the end of the second quarter, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -20% from the first quarter of 2020. The graph below displays the number of hedge funds with bullish position in WGO over the last 24 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 Winnebago Industries, Inc. (NYSE:WGO) was held by Fisher Asset Management, which reported holding $119 million worth of stock at the end of June. It was followed by Punch Card Capital with a $69.5 million position. Other investors bullish on the company included Citadel Investment Group, Candlestick Capital Management, and Royce & Associates. In terms of the portfolio weights assigned to each position Punch Card Capital allocated the biggest weight to Winnebago Industries, Inc. (NYSE:WGO), around 18.31% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, designating 1.2 percent of its 13F equity portfolio to WGO.

Since Winnebago Industries, Inc. (NYSE:WGO) has experienced a decline in interest from hedge fund managers, it's easy to see that there lies a certain "tier" of fund managers that decided to sell off their positions entirely in the second quarter. Interestingly, Ken Heebner's Capital Growth Management said goodbye to the largest stake of the "upper crust" of funds tracked by Insider Monkey, totaling about $23.4 million in stock. Kamyar Khajavi's fund, MIK Capital, also dropped its stock, about $13.5 million worth. These moves are important to note, as aggregate hedge fund interest was cut by 6 funds in the second quarter.

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Winnebago Industries, Inc. (NYSE:WGO) but similarly valued. We will take a look at Coeur Mining, Inc. (NYSE:CDE), Inter Parfums, Inc. (NASDAQ:IPAR), Avaya Holdings Corp. (NYSE:AVYA), Harmony Gold Mining Company Limited (NYSE:HMY), Hub Group Inc (NASDAQ:HUBG), Prothena Corporation plc (NASDAQ:PRTA), and Telos Corporation (NASDAQ:TLS). This group of stocks' market caps are closest to WGO's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CDE,19,59464,1 IPAR,19,100882,10 AVYA,37,435949,0 HMY,11,102386,3 HUBG,24,205728,5 PRTA,20,888175,3 TLS,19,228954,4 Average,21.3,288791,3.7 [/table]

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 $289 million. That figure was $376 million in WGO's case. Avaya Holdings Corp. (NYSE:AVYA) is the most popular stock in this table. On the other hand Harmony Gold Mining Company Limited (NYSE:HMY) is the least popular one with only 11 bullish hedge fund positions. Winnebago Industries, Inc. (NYSE:WGO) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WGO is 45.8. 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 October 22nd and beat the market again by 1.6 percentage points. Unfortunately WGO wasn't nearly as popular as these 5 stocks and hedge funds that were betting on WGO were disappointed as the stock returned -0.7% since the end of June (through 10/22) 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.