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 September 30, so let’s proceed with the discussion of the hedge fund sentiment on Willis Towers Watson Public Limited Company (NASDAQ:WLTW).
Willis Towers Watson Public Limited Company (NASDAQ:WLTW) has seen an increase in enthusiasm from smart money lately. WLTW was in 35 hedge funds' portfolios at the end of the third quarter of 2019. There were 33 hedge funds in our database with WLTW holdings at the end of the previous quarter. Our calculations also showed that WLTW 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. Let's review the fresh hedge fund action regarding Willis Towers Watson Public Limited Company (NASDAQ:WLTW).
What have hedge funds been doing with Willis Towers Watson Public Limited Company (NASDAQ:WLTW)?
At Q3's end, a total of 35 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. The graph below displays the number of hedge funds with bullish position in WLTW over the last 17 quarters. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Cantillon Capital Management was the largest shareholder of Willis Towers Watson Public Limited Company (NASDAQ:WLTW), with a stake worth $463.5 million reported as of the end of September. Trailing Cantillon Capital Management was Citadel Investment Group, which amassed a stake valued at $277.8 million. Abrams Capital Management, Permian Investment Partners, and Diamond Hill Capital were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Permian Investment Partners allocated the biggest weight to Willis Towers Watson Public Limited Company (NASDAQ:WLTW), around 27.49% of its portfolio. Abrams Capital Management is also relatively very bullish on the stock, setting aside 6 percent of its 13F equity portfolio to WLTW.
With a general bullishness amongst the heavyweights, some big names were leading the bulls' herd. Balyasny Asset Management, managed by Dmitry Balyasny, established the biggest call position in Willis Towers Watson Public Limited Company (NASDAQ:WLTW). Balyasny Asset Management had $10.2 million invested in the company at the end of the quarter. Vikas Lunia's Lunia Capital also initiated a $6 million position during the quarter. The other funds with brand new WLTW positions are Matthew Tewksbury's Stevens Capital Management, Michael Platt and William Reeves's BlueCrest Capital Mgmt., and Paul Marshall and Ian Wace's Marshall Wace.
Let's check out hedge fund activity in other stocks similar to Willis Towers Watson Public Limited Company (NASDAQ:WLTW). These stocks are FleetCor Technologies, Inc. (NYSE:FLT), Realty Income Corporation (NYSE:O), DTE Energy Company (NYSE:DTE), and Waste Connections, Inc. (NYSE:WCN). This group of stocks' market values resemble WLTW's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FLT,42,2138351,2 O,16,177826,-6 DTE,20,678909,-8 WCN,29,575449,3 Average,26.75,892634,-2.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.75 hedge funds with bullish positions and the average amount invested in these stocks was $893 million. That figure was $1906 million in WLTW's case. FleetCor Technologies, Inc. (NYSE:FLT) is the most popular stock in this table. On the other hand Realty Income Corporation (NYSE:O) is the least popular one with only 16 bullish hedge fund positions. Willis Towers Watson Public Limited Company (NASDAQ:WLTW) is not the most popular stock in this group but hedge fund interest is still above average. 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 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. Unfortunately WLTW wasn't nearly as popular as these 20 stocks and hedge funds that were betting on WLTW were disappointed as the stock returned 1.8% during the fourth quarter (through the end of November) 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 this year.
Disclosure: None. This article was originally published at Insider Monkey.