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Do Hedge Funds Love Wageworks Inc (WAGE)?

Nina Todic

Is Wageworks Inc (NYSE:WAGE) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Wageworks Inc (NYSE:WAGE) investors should pay attention to a decrease in hedge fund sentiment of late. Our calculations also showed that wage isn't among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Izzy Englander of MILLENNIUM MANAGEMENT

Let's check out the new hedge fund action surrounding Wageworks Inc (NYSE:WAGE).

What does the smart money think about Wageworks Inc (NYSE:WAGE)?

At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards WAGE over the last 13 quarters. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).

No of Hedge Funds with WAGE Positions

When looking at the institutional investors followed by Insider Monkey, D E Shaw, managed by D. E. Shaw, holds the most valuable position in Wageworks Inc (NYSE:WAGE). D E Shaw has a $14.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Israel Englander of Millennium Management, with a $12.4 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Some other peers that hold long positions consist of Noam Gottesman's GLG Partners, Jim Simons's Renaissance Technologies and Ken Griffin's Citadel Investment Group.

Because Wageworks Inc (NYSE:WAGE) has experienced a decline in interest from the entirety of the hedge funds we track, logic holds that there is a sect of money managers who sold off their positions entirely by the end of the third quarter. Intriguingly, William C. Martin's Raging Capital Management dropped the biggest investment of all the hedgies monitored by Insider Monkey, valued at close to $8.4 million in stock, and Ira Unschuld's Brant Point Investment Management was right behind this move, as the fund said goodbye to about $2.1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 1 funds by the end of the third quarter.

Let's now take a look at hedge fund activity in other stocks similar to Wageworks Inc (NYSE:WAGE). These stocks are AAR Corp. (NYSE:AIR), Acacia Communications, Inc. (NASDAQ:ACIA), NBT Bancorp Inc. (NASDAQ:NBTB), and Big Lots, Inc. (NYSE:BIG). This group of stocks' market caps resemble WAGE's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AIR,22,121956,6 ACIA,17,64336,6 NBTB,8,11663,-1 BIG,19,196396,3 Average,16.5,98588,3.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $55 million in WAGE's case. AAR Corp. (NYSE:AIR) is the most popular stock in this table. On the other hand NBT Bancorp Inc. (NASDAQ:NBTB) is the least popular one with only 8 bullish hedge fund positions. Wageworks Inc (NYSE:WAGE) 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. In this regard AIR might be a better candidate to consider a long position.

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

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