Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Wabtec Corporation (NYSE:WAB).
Wabtec Corporation (NYSE:WAB) shares haven't seen a lot of action during the first quarter. Overall, hedge fund sentiment was unchanged. The stock was in 41 hedge funds' portfolios at the end of March. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Enel Americas S.A. (NYSE:ENIA), NetApp Inc. (NASDAQ:NTAP), and Ubiquiti Inc. (NYSE:UI) to gather more data points. Our calculations also showed that WAB 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). Video: Watch our video about the top 5 most popular hedge fund stocks.
To most investors, hedge funds are assumed to be slow, old financial vehicles of years past. While there are over 8000 funds in operation at present, Our experts look at the top tier of this club, approximately 850 funds. It is estimated that this group of investors oversee bulk of all hedge funds' total capital, and by paying attention to their matchless picks, Insider Monkey has unearthed several investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_30647" align="aligncenter" width="397"] Boykin Curry of Eagle Capital[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we are still not out of the woods in terms of the coronavirus pandemic. So, we checked out this successful trader’s “corona catalyst plays“. 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 take a peek at the fresh hedge fund action encompassing Wabtec Corporation (NYSE:WAB).
Hedge fund activity in Wabtec Corporation (NYSE:WAB)
Heading into the second quarter of 2020, a total of 41 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in WAB over the last 18 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Pzena Investment Management was the largest shareholder of Wabtec Corporation (NYSE:WAB), with a stake worth $323.1 million reported as of the end of September. Trailing Pzena Investment Management was Farallon Capital, which amassed a stake valued at $304.3 million. Eagle Capital Management, First Pacific Advisors LLC, and 3G Sahana Capital Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position 3G Sahana Capital Management allocated the biggest weight to Wabtec Corporation (NYSE:WAB), around 17.48% of its 13F portfolio. Park Presidio Capital is also relatively very bullish on the stock, designating 7.86 percent of its 13F equity portfolio to WAB.
Seeing as Wabtec Corporation (NYSE:WAB) has faced falling interest from the entirety of the hedge funds we track, it's easy to see that there were a few fund managers who were dropping their positions entirely by the end of the third quarter. At the top of the heap, Bob Peck and Andy Raab's FPR Partners cut the biggest position of all the hedgies monitored by Insider Monkey, totaling an estimated $170.2 million in stock, and Jorge Paulo Lemann's 3G Capital was right behind this move, as the fund dropped about $95.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Wabtec Corporation (NYSE:WAB) but similarly valued. We will take a look at Enel Americas S.A. (NYSE:ENIA), NetApp Inc. (NASDAQ:NTAP), Ubiquiti Inc. (NYSE:UI), and Coupa Software Incorporated (NASDAQ:COUP). All of these stocks' market caps match WAB's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ENIA,7,102191,-1 NTAP,26,335752,-1 UI,23,162047,-2 COUP,66,2184206,11 Average,30.5,696049,1.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 30.5 hedge funds with bullish positions and the average amount invested in these stocks was $696 million. That figure was $1405 million in WAB's case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand Enel Americas S.A. (NYSE:ENIA) is the least popular one with only 7 bullish hedge fund positions. Wabtec Corporation (NYSE:WAB) 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 8.3% in 2020 through the end of May but still beat the market by 13.2 percentage points. Hedge funds were also right about betting on WAB as the stock returned 27.2% in Q2 (through the end of May) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.