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The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of March 31st, a week after the market trough. Now, we are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article you are going to find out whether hedge funds thoughtWorld Wrestling Entertainment, Inc. (NYSE:WWE) was a good investment heading into the second quarter and how the stock traded in comparison to the top hedge fund picks.
Is World Wrestling Entertainment, Inc. (NYSE:WWE) a first-rate investment right now? Hedge funds were becoming more confident. The number of bullish hedge fund bets rose by 1 recently. Our calculations also showed that WWE 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Ricky Sandler of Eminence Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Hedge fund sentiment towards Tesla reached its all time high at the end of 2019 and Tesla shares more than tripled this year. We are trying to identify other EV revolution winners, so we are checking out this tiny lithium stock. Now let's take a glance at the fresh hedge fund action regarding World Wrestling Entertainment, Inc. (NYSE:WWE).
Hedge fund activity in World Wrestling Entertainment, Inc. (NYSE:WWE)
At the end of the first quarter, a total of 31 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from one quarter earlier. On the other hand, there were a total of 47 hedge funds with a bullish position in WWE a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Eric Bannasch's Cadian Capital has the biggest position in World Wrestling Entertainment, Inc. (NYSE:WWE), worth close to $109.9 million, comprising 5.4% of its total 13F portfolio. On Cadian Capital's heels is Karthik Sarma of SRS Investment Management, with a $60.5 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Remaining peers that hold long positions consist of Ricky Sandler's Eminence Capital, John Brennan's Sirios Capital Management and Mario Cibelli's Marathon Partners. In terms of the portfolio weights assigned to each position Marathon Partners allocated the biggest weight to World Wrestling Entertainment, Inc. (NYSE:WWE), around 15.1% of its 13F portfolio. Cowbird Capital is also relatively very bullish on the stock, earmarking 12.42 percent of its 13F equity portfolio to WWE.
As one would reasonably expect, some big names have jumped into World Wrestling Entertainment, Inc. (NYSE:WWE) headfirst. Cadian Capital, managed by Eric Bannasch, created the largest position in World Wrestling Entertainment, Inc. (NYSE:WWE). Cadian Capital had $109.9 million invested in the company at the end of the quarter. Ricky Sandler's Eminence Capital also initiated a $56.8 million position during the quarter. The other funds with new positions in the stock are Dmitry Balyasny's Balyasny Asset Management, Malcolm Levine's Dendur Capital, and Michael Zimmerman's Prentice Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as World Wrestling Entertainment, Inc. (NYSE:WWE) but similarly valued. We will take a look at Yamana Gold Inc. (NYSE:AUY), Power Integrations Inc (NASDAQ:POWI), The Gap Inc. (NYSE:GPS), and Kirby Corporation (NYSE:KEX). All of these stocks' market caps match WWE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AUY,14,212094,-2 POWI,21,76700,4 GPS,24,48879,-7 KEX,21,288290,-5 Average,20,156491,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $156 million. That figure was $375 million in WWE's case. The Gap Inc. (NYSE:GPS) is the most popular stock in this table. On the other hand Yamana Gold Inc. (NYSE:AUY) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks World Wrestling Entertainment, Inc. (NYSE:WWE) is more popular among hedge funds. 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 returned 12.3% in 2020 through June 30th but still managed to beat the market by 15.5 percentage points. Hedge funds were also right about betting on WWE as the stock returned 28.4% in Q2 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.