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WideOpenWest, Inc. (WOW): Are Hedge Funds Right About This Stock?

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A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended June 30th, so let’s proceed with the discussion of the hedge fund sentiment on WideOpenWest, Inc. (NYSE:WOW).

WideOpenWest, Inc. (NYSE:WOW) was in 19 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 20. WOW has seen an increase in enthusiasm from smart money in recent months. There were 14 hedge funds in our database with WOW positions at the end of the first quarter. Our calculations also showed that WOW isn't among the 30 most popular stocks among hedge funds (click for Q2 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 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds' moves today.

Michael Gelband of ExodusPoint Capital

With all of this in mind let's check out the fresh hedge fund action surrounding WideOpenWest, Inc. (NYSE:WOW).

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

At the end of June, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 36% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WOW over the last 24 quarters. With the smart money's capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

The largest stake in WideOpenWest, Inc. (NYSE:WOW) was held by Nine Ten Partners, which reported holding $148.8 million worth of stock at the end of June. It was followed by Simcoe Capital Management with a $76.8 million position. Other investors bullish on the company included GAMCO Investors, Arrowstreet Capital, and Millennium Management. In terms of the portfolio weights assigned to each position Nine Ten Partners allocated the biggest weight to WideOpenWest, Inc. (NYSE:WOW), around 16% of its 13F portfolio. Simcoe Capital Management is also relatively very bullish on the stock, setting aside 8.44 percent of its 13F equity portfolio to WOW.

As one would reasonably expect, some big names have jumped into WideOpenWest, Inc. (NYSE:WOW) headfirst. Tiger Eye Capital, managed by Ben Gambill, created the biggest position in WideOpenWest, Inc. (NYSE:WOW). Tiger Eye Capital had $5.2 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also initiated a $2.5 million position during the quarter. The other funds with new positions in the stock are Israel Englander's Millennium Management, Donald Sussman's Paloma Partners, and Ken Griffin's Citadel Investment Group.

Let's go over hedge fund activity in other stocks similar to WideOpenWest, Inc. (NYSE:WOW). We will take a look at Yext, Inc. (NYSE:YEXT), Argo Group International Holdings, Ltd. (NYSE:ARGO), Core Laboratories N.V. (NYSE:CLB), Lindsay Corporation (NYSE:LNN), QAD Inc. (NASDAQ:QADA), BioLife Solutions, Inc. (NASDAQ:BLFS), and Pretium Resources Inc (NYSE:PVG). This group of stocks' market caps match WOW's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position YEXT,19,54134,6 ARGO,12,230220,-1 CLB,16,238361,-1 LNN,14,215504,4 QADA,23,230920,9 BLFS,9,474531,-3 PVG,22,153956,0 Average,16.4,228232,2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 16.4 hedge funds with bullish positions and the average amount invested in these stocks was $228 million. That figure was $296 million in WOW's case. QAD Inc. (NASDAQ:QADA) is the most popular stock in this table. On the other hand BioLife Solutions, Inc. (NASDAQ:BLFS) is the least popular one with only 9 bullish hedge fund positions. WideOpenWest, Inc. (NYSE:WOW) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WOW is 74.2. 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. This is a slightly positive signal but 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately WOW wasn't nearly as popular as these 5 stocks and hedge funds that were betting on WOW were disappointed as the stock returned -0.9% since the end of June (through 10/22) 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 many of these stocks already outperformed the market since 2019.

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