In this article we will check out the progression of hedge fund sentiment towards Washington Federal Inc. (NASDAQ:WAFD) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Washington Federal Inc. (NASDAQ:WAFD) was in 18 hedge funds' portfolios at the end of March. WAFD shareholders have witnessed a decrease in activity from the world's largest hedge funds lately. There were 19 hedge funds in our database with WAFD positions at the end of the previous quarter. Our calculations also showed that WAFD 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.
At the moment there are a large number of methods investors can use to assess publicly traded companies. A couple of the most under-the-radar methods are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the elite fund managers can outperform the market by a significant margin (see the details here).
[caption id="attachment_256989" align="aligncenter" width="400"] Dmitry Balyasny of Balyasny Asset Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 go over the key hedge fund action encompassing Washington Federal Inc. (NASDAQ:WAFD).
What have hedge funds been doing with Washington Federal Inc. (NASDAQ:WAFD)?
Heading into the second quarter of 2020, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WAFD over the last 18 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey,
Renaissance Technologies has the biggest position in Washington Federal Inc. (NASDAQ:WAFD), worth close to $8.9 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Marshall Wace LLP, managed by Paul Marshall and Ian Wace, which holds a $6.7 million position; 0.1% of its 13F portfolio is allocated to the company. Other peers that are bullish encompass Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Israel Englander's Millennium Management and D. E. Shaw's D E Shaw. In terms of the portfolio weights assigned to each position Tudor Investment Corp allocated the biggest weight to Washington Federal Inc. (NASDAQ:WAFD), around 0.12% of its 13F portfolio. AlphaCrest Capital Management is also relatively very bullish on the stock, dishing out 0.09 percent of its 13F equity portfolio to WAFD.
Judging by the fact that Washington Federal Inc. (NASDAQ:WAFD) has witnessed bearish sentiment from the aggregate hedge fund industry, it's safe to say that there were a few funds that decided to sell off their full holdings last quarter. It's worth mentioning that Noam Gottesman's GLG Partners dropped the largest position of all the hedgies followed by Insider Monkey, worth close to $5.9 million in stock. Donald Sussman's fund, Paloma Partners, also dropped its stock, about $1.9 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 1 funds last quarter.
Let's check out hedge fund activity in other stocks similar to Washington Federal Inc. (NASDAQ:WAFD). These stocks are Fabrinet (NYSE:FN), Select Medical Holdings Corporation (NYSE:SEM), TC Pipelines, LP (NYSE:TCP), and Associated Banc Corp (NYSE:ASB). This group of stocks' market values are closest to WAFD's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FN,22,132983,-3 SEM,18,106537,-3 TCP,2,9665,-1 ASB,16,124559,-8 Average,14.5,93436,-3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $43 million in WAFD's case. Fabrinet (NYSE:FN) is the most popular stock in this table. On the other hand TC Pipelines, LP (NYSE:TCP) is the least popular one with only 2 bullish hedge fund positions. Washington Federal Inc. (NASDAQ:WAFD) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. 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 beat the market by 15.9 percentage points. Unfortunately WAFD wasn't nearly as popular as these 10 stocks and hedge funds that were betting on WAFD were disappointed as the stock returned 1.2% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.