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Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Wabtec Corporation (NYSE:WAB), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Wabtec Corporation (NYSE:WAB) investors should pay attention to an increase in activity from the world's largest hedge funds lately. WAB was in 32 hedge funds' portfolios at the end of September. There were 27 hedge funds in our database with WAB holdings at the end of the previous quarter. Our calculations also showed that WAB isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In today’s marketplace there are several gauges investors can use to value stocks. A pair of the less utilized gauges are hedge fund and insider trading indicators. We have shown that, historically, those who follow the best picks of the top hedge fund managers can outperform the broader indices by a very impressive amount (see the details here).
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Andrew Raab of FPR Partners[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a look at the new hedge fund action encompassing Wabtec Corporation (NYSE:WAB).
What does smart money think about Wabtec Corporation (NYSE:WAB)?
At the end of the third quarter, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the previous quarter. By comparison, 18 hedge funds held shares or bullish call options in WAB a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
Among these funds, Farallon Capital held the most valuable stake in Wabtec Corporation (NYSE:WAB), which was worth $450.6 million at the end of the third quarter. On the second spot was Pzena Investment Management which amassed $320.1 million worth of shares. Eagle Capital Management, FPR Partners, and Gates 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 Capital allocated the biggest weight to Wabtec Corporation (NYSE:WAB), around 11.3% of its portfolio. Park Presidio Capital is also relatively very bullish on the stock, earmarking 9.72 percent of its 13F equity portfolio to WAB.
Consequently, key hedge funds were leading the bulls' herd. Manikay Partners, managed by Shane Finemore, created the most valuable position in Wabtec Corporation (NYSE:WAB). Manikay Partners had $18 million invested in the company at the end of the quarter. Phill Gross and Robert Atchinson's Adage Capital Management also made a $13.8 million investment in the stock during the quarter. The following funds were also among the new WAB investors: Michael A. Price and Amos Meron's Empyrean Capital Partners, Sara Nainzadeh's Centenus Global Management, and Perella Weinberg Partners.
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 Hologic, Inc. (NASDAQ:HOLX), Sun Communities Inc (NYSE:SUI), Atmos Energy Corporation (NYSE:ATO), and Cna Financial Corporation (NYSE:CNA). This group of stocks' market valuations are similar to WAB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HOLX,33,1018180,1 SUI,15,303237,-5 ATO,19,407896,5 CNA,14,86638,2 Average,20.25,453988,0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $454 million. That figure was $1647 million in WAB's case. Hologic, Inc. (NASDAQ:HOLX) is the most popular stock in this table. On the other hand Cna Financial Corporation (NYSE:CNA) is the least popular one with only 14 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on WAB, though not to the same extent, as the stock returned 9.5% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
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