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While the market driven by short-term sentiment influenced by the accomodative interest rate environment in the US, virus news and stimulus talks, many smart money investors are starting to get cautious towards the current bull run since March and hedging or reducing many of their long positions. Some fund managers are betting on Dow hitting 30,000 to generate strong returns. However, as we know, big investors usually buy stocks with strong fundamentals that can deliver gains both in bull and bear markets, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Westwood Holdings Group, Inc. (NYSE:WHG).
Is WHG a good stock to buy now? Westwood Holdings Group, Inc. (NYSE:WHG) shareholders have witnessed a decrease in hedge fund interest recently. Westwood Holdings Group, Inc. (NYSE:WHG) was in 7 hedge funds' portfolios at the end of September. The all time high for this statistics is 11. There were 8 hedge funds in our database with WHG positions at the end of the second quarter. 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 for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are dozens of indicators stock market investors put to use to grade stocks. A duo of the most innovative indicators are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outpace the broader indices by a significant margin (see the details here).
Mario Gabelli of GAMCO Investors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. With all of this in mind let's analyze the latest hedge fund action encompassing Westwood Holdings Group, Inc. (NYSE:WHG).
How are hedge funds trading Westwood Holdings Group, Inc. (NYSE:WHG)?
At third quarter's end, a total of 7 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -13% from one quarter earlier. By comparison, 11 hedge funds held shares or bullish call options in WHG a year ago. With the smart money's capital changing hands, there exists a few notable hedge fund managers who were boosting their stakes substantially (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Renaissance Technologies, holds the number one position in Westwood Holdings Group, Inc. (NYSE:WHG). Renaissance Technologies has a $8.2 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by GAMCO Investors, led by Mario Gabelli, holding a $6.4 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other members of the smart money with similar optimism comprise Phil Frohlich's Prescott Group Capital Management, D. E. Shaw's D E Shaw and Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital. In terms of the portfolio weights assigned to each position Prescott Group Capital Management allocated the biggest weight to Westwood Holdings Group, Inc. (NYSE:WHG), around 0.31% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, setting aside 0.07 percent of its 13F equity portfolio to WHG.
Judging by the fact that Westwood Holdings Group, Inc. (NYSE:WHG) has faced declining sentiment from the smart money, it's safe to say that there was a specific group of funds who sold off their full holdings by the end of the third quarter. It's worth mentioning that Cliff Asness's AQR Capital Management dumped the largest position of the "upper crust" of funds tracked by Insider Monkey, valued at close to $0.8 million in stock. John Overdeck and David Siegel's fund, Two Sigma Advisors, also sold off its stock, about $0.2 million worth. These bearish behaviors 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 similar to Westwood Holdings Group, Inc. (NYSE:WHG). These stocks are Bionano Genomics, Inc. (NASDAQ:BNGO), Pareteum Corporation (NASDAQ:TEUM), Ultralife Corp. (NASDAQ:ULBI), Solid Biosciences Inc. (NASDAQ:SLDB), OncoCyte Corporation (NYSE:OCX), Lipocine Inc (NASDAQ:LPCN), and Frequency Electronics, Inc. (NASDAQ:FEIM). This group of stocks' market values are closest to WHG's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BNGO,2,202,-1 TEUM,4,465,-3 ULBI,4,2236,1 SLDB,11,26616,-1 OCX,5,29185,-2 LPCN,3,663,-1 FEIM,4,9778,0 Average,4.7,9878,-1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.7 hedge funds with bullish positions and the average amount invested in these stocks was $10 million. That figure was $17 million in WHG's case. Solid Biosciences Inc. (NASDAQ:SLDB) is the most popular stock in this table. On the other hand Bionano Genomics, Inc. (NASDAQ:BNGO) is the least popular one with only 2 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 overall hedge fund sentiment score for WHG is 50.9. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on WHG as the stock returned 13.1% since the end of Q3 (through 12/2) 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.