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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31st. We at Insider Monkey have made an extensive database of more than 866 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Webster Financial Corporation (NYSE:WBS) based on those filings.
Webster Financial Corporation (NYSE:WBS) was in 27 hedge funds' portfolios at the end of March. The all time high for this statistic is 33. WBS has seen an increase in hedge fund interest in recent months. There were 26 hedge funds in our database with WBS holdings at the end of December. Our calculations also showed that WBS isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
To most market participants, hedge funds are viewed as underperforming, old investment tools of years past. While there are over 8000 funds in operation today, We look at the masters of this club, approximately 850 funds. It is estimated that this group of investors shepherd bulk of the smart money's total capital, and by tailing their first-class investments, Insider Monkey has figured out several investment strategies that have historically outpaced the market. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Matthew Hulsizer of PEAK6 Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. With all of this in mind we're going to take a look at the key hedge fund action encompassing Webster Financial Corporation (NYSE:WBS).
Do Hedge Funds Think WBS Is A Good Stock To Buy Now?
At Q1's end, a total of 27 of the hedge funds tracked by Insider Monkey were long this stock, a change of 4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WBS over the last 23 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Pzena Investment Management, managed by Richard S. Pzena, holds the most valuable position in Webster Financial Corporation (NYSE:WBS). Pzena Investment Management has a $132.5 million position in the stock, comprising 0.5% of its 13F portfolio. Coming in second is Nitorum Capital, managed by Seth Rosen, which holds a $81.7 million position; the fund has 4.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions comprise Bernard Horn's Polaris Capital Management, Ken Fisher's Fisher Asset Management and Brandon Haley's Holocene Advisors. In terms of the portfolio weights assigned to each position Blue Grotto Capital allocated the biggest weight to Webster Financial Corporation (NYSE:WBS), around 5.24% of its 13F portfolio. Nitorum Capital is also relatively very bullish on the stock, designating 4.18 percent of its 13F equity portfolio to WBS.
As industrywide interest jumped, key hedge funds were breaking ground themselves. Holocene Advisors, managed by Brandon Haley, assembled the most outsized position in Webster Financial Corporation (NYSE:WBS). Holocene Advisors had $22.8 million invested in the company at the end of the quarter. Paul Tudor Jones's Tudor Investment Corp also made a $1.1 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace LLP, Lee Ainslie's Maverick Capital, and Matthew Hulsizer's PEAK6 Capital Management.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Webster Financial Corporation (NYSE:WBS) but similarly valued. We will take a look at United Bankshares, Inc. (NASDAQ:UBSI), Allogene Therapeutics, Inc. (NASDAQ:ALLO), Emergent Biosolutions Inc (NYSE:EBS), RBC Bearings Incorporated (NASDAQ:ROLL), NCR Corporation (NYSE:NCR), Cirrus Logic, Inc. (NASDAQ:CRUS), and Power Integrations Inc (NASDAQ:POWI). This group of stocks' market values resemble WBS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UBSI,9,44083,0 ALLO,19,282736,1 EBS,13,123191,-6 ROLL,10,47939,-4 NCR,24,383040,-8 CRUS,26,286037,-2 POWI,18,136336,1 Average,17,186195,-2.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $186 million. That figure was $431 million in WBS's case. Cirrus Logic, Inc. (NASDAQ:CRUS) is the most popular stock in this table. On the other hand United Bankshares, Inc. (NASDAQ:UBSI) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Webster Financial Corporation (NYSE:WBS) is more popular among hedge funds. Our overall hedge fund sentiment score for WBS is 80.5. 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. 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 July 9th and still beat the market by 6.7 percentage points. Unfortunately WBS wasn't nearly as popular as these 5 stocks and hedge funds that were betting on WBS were disappointed as the stock returned -6% since the end of the first quarter (through 7/9) 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 most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.