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Were Hedge Funds Right About Weyerhaeuser Co. (WY)?

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  • WY

Is Weyerhaeuser Co. (NYSE:WY) a good place to invest some of your money right now? We can gain invaluable insight to help us answer that question by studying the investment trends of top investors, who employ world-class Ivy League graduates, who are given immense resources and industry contacts to put their financial expertise to work. The top picks of these firms have historically outperformed the market when we account for known risk factors, making them very valuable investment ideas.

Is Weyerhaeuser Co. (NYSE:WY) the right investment to pursue these days? The smart money was taking a bullish view. The number of long hedge fund bets increased by 1 in recent months. Weyerhaeuser Co. (NYSE:WY) was in 39 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 41. Our calculations also showed that WY isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

At the moment there are several metrics shareholders employ to grade publicly traded companies. Some of the most under-the-radar metrics are hedge fund and insider trading sentiment. Our experts have shown that, historically, those who follow the top picks of the best hedge fund managers can outpace their index-focused peers by a significant amount (see the details here). Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Stuart Zimmer Zimmer Partners
Stuart Zimmer Zimmer Partners

Stuart Zimmer of Zimmer Partners

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let's check out the new hedge fund action surrounding Weyerhaeuser Co. (NYSE:WY).

Do Hedge Funds Think WY Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 39 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 3% from the previous quarter. By comparison, 33 hedge funds held shares or bullish call options in WY a year ago. So, let's check out 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, Ric Dillon's 0 has the biggest position in Weyerhaeuser Co. (NYSE:WY), worth close to $277.7 million, corresponding to 1.1% of its total 13F portfolio. The second most bullish fund manager is 0, led by Stuart J. Zimmer, holding a $59.7 million position; 0.8% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that hold long positions comprise D. E. Shaw's 0, 0 and Martin Whitman's 0. In terms of the portfolio weights assigned to each position Third Avenue Management allocated the biggest weight to Weyerhaeuser Co. (NYSE:WY), around 3.77% of its 13F portfolio. Diametric Capital is also relatively very bullish on the stock, designating 1.85 percent of its 13F equity portfolio to WY.

Now, specific money managers were breaking ground themselves. Waterfront Capital Partners, managed by Eduardo Abush, established the most valuable position in Weyerhaeuser Co. (NYSE:WY). Waterfront Capital Partners had $23.8 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $21.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Paul Marshall and Ian Wace's Marshall Wace LLP, Gavin Saitowitz and Cisco J. del Valle's Prelude Capital (previously Springbok Capital), and Alec Litowitz and Ross Laser's Magnetar Capital.

Let's check out hedge fund activity in other stocks similar to Weyerhaeuser Co. (NYSE:WY). These stocks are Kansas City Southern (NYSE:KSU), Teladoc Health, Inc (NYSE:TDOC), Verisign, Inc. (NASDAQ:VRSN), Telefonica S.A. (NYSE:TEF), Consolidated Edison, Inc. (NYSE:ED), Realty Income Corporation (NYSE:O), and DTE Energy Company (NYSE:DTE). This group of stocks' market values match WY's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KSU,61,3303297,12 TDOC,43,3574007,1 VRSN,41,6102142,-1 TEF,4,8903,-2 ED,30,533462,8 O,23,221703,5 DTE,32,469838,6 Average,33.4,2030479,4.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.4 hedge funds with bullish positions and the average amount invested in these stocks was $2030 million. That figure was $663 million in WY's case. Kansas City Southern (NYSE:KSU) is the most popular stock in this table. On the other hand Telefonica S.A. (NYSE:TEF) is the least popular one with only 4 bullish hedge fund positions. Weyerhaeuser Co. (NYSE:WY) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WY is 65.2. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. Hedge funds were also right about betting on WY as the stock returned 13.5% since the end of Q2 (through 11/5) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.