Is Westwood Holdings Group, Inc. (NYSE:WHG) 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.
Westwood Holdings Group, Inc. (NYSE:WHG) has seen a decrease in enthusiasm from smart money lately. Our calculations also showed that WHG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_189632" align="aligncenter" width="450"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a peek at the fresh hedge fund action regarding Westwood Holdings Group, Inc. (NYSE:WHG).
How have hedgies been trading Westwood Holdings Group, Inc. (NYSE:WHG)?
At the end of the third quarter, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in WHG over the last 17 quarters. With hedge funds' capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Westwood Holdings Group, Inc. (NYSE:WHG) was held by Renaissance Technologies, which reported holding $19.2 million worth of stock at the end of September. It was followed by GAMCO Investors with a $15.6 million position. Other investors bullish on the company included AQR Capital Management, Royce & Associates, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position GAMCO Investors allocated the biggest weight to Westwood Holdings Group, Inc. (NYSE:WHG), around 0.13% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to WHG.
Seeing as Westwood Holdings Group, Inc. (NYSE:WHG) has experienced declining sentiment from hedge fund managers, logic holds that there is a sect of funds that elected to cut their entire stakes by the end of the third quarter. Intriguingly, Jeffrey Bronchick's Cove Street Capital said goodbye to the biggest stake of all the hedgies monitored by Insider Monkey, worth about $0.7 million in stock. Gavin Saitowitz and Cisco J. del Valle's fund, Springbok Capital, also sold off its stock, about $0 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 1 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Westwood Holdings Group, Inc. (NYSE:WHG) but similarly valued. These stocks are Biglari Holdings Inc (NYSE:BH), Cumulus Media Inc (NASDAQ:CMLS), Netfin Acquisition Corp. (NASDAQ:NFIN), and Republic First Bancorp, Inc. (NASDAQ:FRBK). This group of stocks' market valuations are closest to WHG's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BH,10,37782,0 CMLS,12,85391,3 NFIN,11,42194,11 FRBK,5,5505,-1 Average,9.5,42718,3.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $43 million. That figure was $43 million in WHG's case. Cumulus Media Inc (NASDAQ:CMLS) is the most popular stock in this table. On the other hand Republic First Bancorp, Inc. (NASDAQ:FRBK) is the least popular one with only 5 bullish hedge fund positions. Westwood Holdings Group, Inc. (NYSE:WHG) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on WHG as the stock returned 11.5% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.