At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we've gathered as a result gives us access to a wealth of collective knowledge based on these firms' portfolio holdings as of March 31. In this article, we will use that wealth of knowledge to determine whether or not WNS (Holdings) Limited (NYSE:WNS) makes for a good investment right now.
WNS (Holdings) Limited (NYSE:WNS) was in 15 hedge funds' portfolios at the end of March. WNS shareholders have witnessed a decrease in activity from the world's largest hedge funds lately. There were 16 hedge funds in our database with WNS holdings at the end of the previous quarter. Our calculations also showed that wns isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
[caption id="attachment_746893" align="aligncenter" width="473"] Paul Marshall of Marshall Wace[/caption]
Let's take a look at the recent hedge fund action surrounding WNS (Holdings) Limited (NYSE:WNS).
Hedge fund activity in WNS (Holdings) Limited (NYSE:WNS)
Heading into the second quarter of 2019, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -6% from the previous quarter. On the other hand, there were a total of 14 hedge funds with a bullish position in WNS a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of WNS (Holdings) Limited (NYSE:WNS), with a stake worth $69.8 million reported as of the end of March. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $21.5 million. GLG Partners, Marshall Wace LLP, and Sensato Capital Management were also very fond of the stock, giving the stock large weights in their portfolios.
Since WNS (Holdings) Limited (NYSE:WNS) has experienced falling interest from the entirety of the hedge funds we track, we can see that there is a sect of hedgies that decided to sell off their positions entirely by the end of the third quarter. Interestingly, Matthew Tewksbury's Stevens Capital Management said goodbye to the biggest stake of the 700 funds monitored by Insider Monkey, totaling close to $0.5 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund dropped about $0.3 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds by the end of the third quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as WNS (Holdings) Limited (NYSE:WNS) but similarly valued. These stocks are Fox Factory Holding Corp (NASDAQ:FOXF), International Game Technology PLC (NYSE:IGT), Union Bankshares Corporation (NASDAQ:UBSH), and Nu Skin Enterprises, Inc. (NYSE:NUS). This group of stocks' market values match WNS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FOXF,14,39357,3 IGT,32,395322,-2 UBSH,7,28413,1 NUS,23,205294,-1 Average,19,167097,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19 hedge funds with bullish positions and the average amount invested in these stocks was $167 million. That figure was $197 million in WNS's case. International Game Technology PLC (NYSE:IGT) is the most popular stock in this table. On the other hand Union Bankshares Corporation (NASDAQ:UBSH) is the least popular one with only 7 bullish hedge fund positions. WNS (Holdings) Limited (NYSE:WNS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on WNS as the stock returned 10.9% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.