In this article we will take a look at whether hedge funds think Westpac Banking Corporation (NYSE:WBK) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is Westpac Banking Corporation (NYSE:WBK) a great investment now? Prominent investors are getting more optimistic. The number of bullish hedge fund bets inched up by 2 recently. Our calculations also showed that WBK 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). WBK was in 9 hedge funds' portfolios at the end of the first quarter of 2020. There were 7 hedge funds in our database with WBK positions at the end of the previous quarter. Video: Watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most investors, hedge funds are seen as worthless, outdated financial vehicles of the past. While there are more than 8000 funds trading at the moment, We look at the leaders of this club, around 850 funds. It is estimated that this group of investors handle most of the smart money's total capital, and by following their highest performing picks, Insider Monkey has revealed several investment strategies that have historically outstripped the broader indices. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points annually 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_256989" align="aligncenter" width="397"] Dmitry Balyasny of Balyasny Asset Management[/caption]
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the 10 most profitable companies in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let's check out the new hedge fund action surrounding Westpac Banking Corporation (NYSE:WBK).
Hedge fund activity in Westpac Banking Corporation (NYSE:WBK)
At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 29% from the previous quarter. By comparison, 6 hedge funds held shares or bullish call options in WBK a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Westpac Banking Corporation (NYSE:WBK) was held by Renaissance Technologies, which reported holding $28.2 million worth of stock at the end of September. It was followed by Athos Capital with a $2.5 million position. Other investors bullish on the company included Citadel Investment Group, Two Sigma Advisors, and Engineers Gate Manager. In terms of the portfolio weights assigned to each position Athos Capital allocated the biggest weight to Westpac Banking Corporation (NYSE:WBK), around 1.77% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.03 percent of its 13F equity portfolio to WBK.
Consequently, specific money managers were leading the bulls' herd. Athos Capital, managed by Matthew Moskey and Friedrich Schulte-Hillen, established the most outsized position in Westpac Banking Corporation (NYSE:WBK). Athos Capital had $2.5 million invested in the company at the end of the quarter. Greg Eisner's Engineers Gate Manager also made a $0.3 million investment in the stock during the quarter. The other funds with new positions in the stock are Michael Gelband's ExodusPoint Capital, Dmitry Balyasny's Balyasny Asset Management, and Paul Marshall and Ian Wace's Marshall Wace LLP.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Westpac Banking Corporation (NYSE:WBK) but similarly valued. These stocks are Sprint Corporation (NYSE:S), Lam Research Corporation (NASDAQ:LRCX), Centene Corporation (NYSE:CNC), and Baidu, Inc. (NASDAQ:BIDU). This group of stocks' market caps resemble WBK's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position S,31,1437906,-4 LRCX,54,1780073,2 CNC,66,3533228,4 BIDU,49,2234830,-11 Average,50,2246509,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 50 hedge funds with bullish positions and the average amount invested in these stocks was $2247 million. That figure was $32 million in WBK's case. Centene Corporation (NYSE:CNC) is the most popular stock in this table. On the other hand Sprint Corporation (NYSE:S) is the least popular one with only 31 bullish hedge fund positions. Compared to these stocks Westpac Banking Corporation (NYSE:WBK) is even less popular than S. 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 13.4% in 2020 through June 22nd but managed to beat the market by 15.9 percentage points. A small number of hedge funds were also right about betting on WBK, though not to the same extent, as the stock returned 22.9% during the second quarter (through June 22nd) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.