Is Worthington Industries, Inc. (NYSE:WOR) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to find the winners in the stock market.
Is Worthington Industries, Inc. (NYSE:WOR) a buy, sell, or hold? Investors who are in the know are in an optimistic mood. The number of long hedge fund bets moved up by 1 lately. Our calculations also showed that WOR isn't among the 30 most popular stocks among hedge funds. WOR was in 11 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 10 hedge funds in our database with WOR positions at the end of the previous quarter.
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 32 percentage points since May 2014 through March 12, 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.
Let's review the new hedge fund action regarding Worthington Industries, Inc. (NYSE:WOR).
How are hedge funds trading Worthington Industries, Inc. (NYSE:WOR)?
At Q4's end, a total of 11 of the hedge funds tracked by Insider Monkey were long this stock, a change of 10% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WOR over the last 14 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in Worthington Industries, Inc. (NYSE:WOR). Royce & Associates has a $24.8 million position in the stock, comprising 0.2% of its 13F portfolio. Coming in second is Winton Capital Management, led by David Harding, holding a $15.5 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Other members of the smart money that hold long positions encompass Ken Fisher's Fisher Asset Management, Cliff Asness's AQR Capital Management and Noam Gottesman's GLG Partners.
Now, key hedge funds have been driving this bullishness. GLG Partners, managed by Noam Gottesman, initiated the largest position in Worthington Industries, Inc. (NYSE:WOR). GLG Partners had $3.9 million invested in the company at the end of the quarter. Peter Muller's PDT Partners also made a $1.1 million investment in the stock during the quarter. The following funds were also among the new WOR investors: Jeffrey Talpins's Element Capital Management and Hoon Kim's Quantinno Capital.
Let's also examine hedge fund activity in other stocks similar to Worthington Industries, Inc. (NYSE:WOR). We will take a look at Southwestern Energy Company (NYSE:SWN), Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA), trivago N.V. (NASDAQ:TRVG), and Independent Bank Corp (NASDAQ:INDB). This group of stocks' market values are similar to WOR's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SWN,25,190350,2 IBA,3,29611,0 TRVG,13,162466,4 INDB,9,12433,2 Average,12.5,98715,2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $99 million. That figure was $60 million in WOR's case. Southwestern Energy Company (NYSE:SWN) is the most popular stock in this table. On the other hand Industrias Bachoco, S.A.B. de C.V. (NYSE:IBA) is the least popular one with only 3 bullish hedge fund positions. Worthington Industries, Inc. (NYSE:WOR) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately WOR wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); WOR investors were disappointed as the stock returned 15.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.