We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like WideOpenWest, Inc. (NYSE:WOW).
WideOpenWest, Inc. (NYSE:WOW) has seen a decrease in support from the world's most elite money managers in recent months. WOW was in 8 hedge funds' portfolios at the end of June. There were 11 hedge funds in our database with WOW positions at the end of the previous quarter. Our calculations also showed that WOW isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most shareholders, hedge funds are seen as worthless, outdated investment tools of yesteryear. While there are more than 8000 funds with their doors open at the moment, Our experts choose to focus on the aristocrats of this club, approximately 750 funds. Most estimates calculate that this group of people handle most of the hedge fund industry's total capital, and by observing their best picks, Insider Monkey has brought to light several investment strategies that have historically surpassed the broader indices. Insider Monkey's flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points per year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to view the fresh hedge fund action encompassing WideOpenWest, Inc. (NYSE:WOW).
Hedge fund activity in WideOpenWest, Inc. (NYSE:WOW)
Heading into the third quarter of 2019, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -27% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WOW over the last 16 quarters. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in WideOpenWest, Inc. (NYSE:WOW) was held by Arrowstreet Capital, which reported holding $4.8 million worth of stock at the end of March. It was followed by Millennium Management with a $3.1 million position. Other investors bullish on the company included GAMCO Investors, D E Shaw, and Citadel Investment Group.
Seeing as WideOpenWest, Inc. (NYSE:WOW) has faced bearish sentiment from the smart money, we can see that there were a few funds that decided to sell off their full holdings in the second quarter. It's worth mentioning that Derek C. Schrier's Indaba Capital Management dumped the largest stake of the 750 funds watched by Insider Monkey, comprising an estimated $5 million in stock. Cliff Asness's fund, AQR Capital Management, also said goodbye to its stock, about $1.2 million worth. These transactions are interesting, as total hedge fund interest was cut by 3 funds in the second quarter.
Let's also examine hedge fund activity in other stocks similar to WideOpenWest, Inc. (NYSE:WOW). We will take a look at FTS International, Inc. (NYSE:FTSI), Quanex Building Products Corporation (NYSE:NX), Quotient Limited (NASDAQ:QTNT), and HarborOne Bancorp, Inc. (NASDAQ:HONE). This group of stocks' market valuations resemble WOW's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FTSI,18,27543,-3 NX,13,51317,-3 QTNT,20,280265,0 HONE,4,11384,0 Average,13.75,92627,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $15 million in WOW's case. Quotient Limited (NASDAQ:QTNT) is the most popular stock in this table. On the other hand HarborOne Bancorp, Inc. (NASDAQ:HONE) is the least popular one with only 4 bullish hedge fund positions. WideOpenWest, Inc. (NYSE:WOW) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately WOW wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WOW investors were disappointed as the stock returned -15.2% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.