World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Wabash National Corporation (NYSE:WNC) was in 13 hedge funds' portfolios at the end of September. WNC has experienced an increase in hedge fund interest lately. There were 12 hedge funds in our database with WNC positions at the end of the previous quarter. Our calculations also showed that WNC 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 18 percentage points since May 2014 through December 3, 2018 (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.
We're going to go over the recent hedge fund action regarding Wabash National Corporation (NYSE:WNC).
Hedge fund activity in Wabash National Corporation (NYSE:WNC)
Heading into the fourth quarter of 2018, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the second quarter of 2018. By comparison, 19 hedge funds held shares or bullish call options in WNC heading into this year. With hedgies' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Among these funds, Royce & Associates held the most valuable stake in Wabash National Corporation (NYSE:WNC), which was worth $73.7 million at the end of the third quarter. On the second spot was Park West Asset Management which amassed $16.9 million worth of shares. Moreover, Millennium Management, Renaissance Technologies, and AQR Capital Management were also bullish on Wabash National Corporation (NYSE:WNC), allocating a large percentage of their portfolios to this stock.
As one would reasonably expect, specific money managers have jumped into Wabash National Corporation (NYSE:WNC) headfirst. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the biggest position in Wabash National Corporation (NYSE:WNC). Marshall Wace LLP had $1.9 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also initiated a $1.9 million position during the quarter. The following funds were also among the new WNC investors: Joel Greenblatt's Gotham Asset Management, Peter Algert and Kevin Coldiron's Algert Coldiron Investors, and Dmitry Balyasny's Balyasny Asset Management.
Let's check out hedge fund activity in other stocks similar to Wabash National Corporation (NYSE:WNC). We will take a look at HighPoint Resources Corporation (NYSE:HPR), AdvanSix Inc. (NYSE:ASIX), Athenex, Inc. (NASDAQ:ATNX), and Health Insurance Innovations Inc (NASDAQ:HIIQ). This group of stocks' market values are similar to WNC's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HPR,13,104566,-6 ASIX,23,156106,5 ATNX,7,63307,1 HIIQ,17,259590,-4 Average,15,145892,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $146 million. That figure was $118 million in WNC's case. AdvanSix Inc. (NYSE:ASIX) is the most popular stock in this table. On the other hand Athenex, Inc. (NASDAQ:ATNX) is the least popular one with only 7 bullish hedge fund positions. Wabash National Corporation (NYSE:WNC) 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. In this regard ASIX might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.