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In this article we will check out the progression of hedge fund sentiment towards Wolverine World Wide, Inc. (NYSE:WWW) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Wolverine World Wide, Inc. (NYSE:WWW) has seen an increase in support from the world's most elite money managers recently. Wolverine World Wide, Inc. (NYSE:WWW) was in 16 hedge funds' portfolios at the end of the first quarter of 2021. The all time high for this statistic is 23. Our calculations also showed that WWW isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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. Hedge funds have more than $3.5 trillion in assets under management, so you can't expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.
Fred DiSanto of Ancora Advisors
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, pet market is growing at a 7% annual rate and is expected to reach $110 billion in 2021. So, we are checking out the 5 best stocks for animal lovers. We go through lists like the 15 best Jim Cramer stocks to identify the next Tesla that will deliver outsized returns. 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. With all of this in mind we're going to analyze the key hedge fund action surrounding Wolverine World Wide, Inc. (NYSE:WWW).
Do Hedge Funds Think WWW Is A Good Stock To Buy Now?
At Q1's end, a total of 16 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 14% from the fourth quarter of 2020. The graph below displays the number of hedge funds with bullish position in WWW over the last 23 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of key hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
The largest stake in Wolverine World Wide, Inc. (NYSE:WWW) was held by Diamond Hill Capital, which reported holding $38.2 million worth of stock at the end of December. It was followed by Ancora Advisors with a $20 million position. Other investors bullish on the company included Royce & Associates, GLG Partners, and GAMCO Investors. In terms of the portfolio weights assigned to each position 0 allocated the biggest weight to Wolverine World Wide, Inc. (NYSE:WWW), around 0.55% of its 13F portfolio. 0 is also relatively very bullish on the stock, setting aside 0.15 percent of its 13F equity portfolio to WWW.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, initiated the biggest position in Wolverine World Wide, Inc. (NYSE:WWW). Arrowstreet Capital had $2.6 million invested in the company at the end of the quarter. John Overdeck and David Siegel's Two Sigma Advisors also initiated a $0.6 million position during the quarter. The following funds were also among the new WWW investors: Parvinder Thiara's Athanor Capital, Matthew Hulsizer's PEAK6 Capital Management, and Greg Eisner's Engineers Gate Manager.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Wolverine World Wide, Inc. (NYSE:WWW) but similarly valued. We will take a look at Trinity Industries, Inc. (NYSE:TRN), Empire State Realty OP, L.P. (NYSE:ESBA), Cohen & Steers, Inc. (NYSE:CNS), Evoqua Water Technologies Corp. (NYSE:AQUA), United States Cellular Corporation (NYSE:USM), Sprouts Farmers Market Inc (NASDAQ:SFM), and SSR Mining Inc. (NASDAQ:SSRM). This group of stocks' market caps are closest to WWW's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TRN,28,987877,6 ESBA,1,114,1 CNS,17,84194,2 AQUA,23,328118,-3 USM,10,97007,-1 SFM,21,404513,-4 SSRM,16,178048,-2 Average,16.6,297124,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.6 hedge funds with bullish positions and the average amount invested in these stocks was $297 million. That figure was $122 million in WWW's case. Trinity Industries, Inc. (NYSE:TRN) is the most popular stock in this table. On the other hand Empire State Realty OP, L.P. (NYSE:ESBA) is the least popular one with only 1 bullish hedge fund positions. Wolverine World Wide, Inc. (NYSE:WWW) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WWW is 55.6. 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. 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 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 28.5% in 2021 through July 23rd and surpassed the market again by 10.1 percentage points. Unfortunately WWW wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WWW investors were disappointed as the stock returned -13.2% since the end of March (through 7/23) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.
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Disclosure: None. This article was originally published at Insider Monkey.