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The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Winmark Corporation (NASDAQ:WINA) based on those filings.
Is WINA a good stock to buy now? Prominent investors were in a pessimistic mood. The number of long hedge fund positions fell by 3 lately. Winmark Corporation (NASDAQ:WINA) was in 10 hedge funds' portfolios at the end of September. The all time high for this statistics is 13. Our calculations also showed that WINA 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.
Today there are dozens of formulas shareholders can use to appraise stocks. Two of the most innovative formulas are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the top picks of the best money managers can outpace their index-focused peers by a solid amount (see the details here).
Cliff Asness of AQR Capital Management
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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. Keeping this in mind we're going to take a look at the fresh hedge fund action regarding Winmark Corporation (NASDAQ:WINA).
Do Hedge Funds Think WINA Is A Good Stock To Buy Now?
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 -23% from the second quarter of 2020. By comparison, 10 hedge funds held shares or bullish call options in WINA a year ago. With hedge funds' sentiment swirling, there exists an "upper tier" of key hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies has the biggest position in Winmark Corporation (NASDAQ:WINA), worth close to $32.9 million, comprising less than 0.1%% of its total 13F portfolio. Coming in second is Brian Bares, Russell Mollen, and James Bradshaw of Nine Ten Partners, with a $32.9 million position; 6.8% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish consist of Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Touk Sinantha's AltraVue Capital and Cliff Asness's AQR Capital Management. In terms of the portfolio weights assigned to each position Nine Ten Partners allocated the biggest weight to Winmark Corporation (NASDAQ:WINA), around 6.83% of its 13F portfolio. AltraVue Capital is also relatively very bullish on the stock, setting aside 2.12 percent of its 13F equity portfolio to WINA.
Because Winmark Corporation (NASDAQ:WINA) has witnessed declining sentiment from the entirety of the hedge funds we track, it's safe to say that there was a specific group of fund managers that slashed their positions entirely by the end of the third quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP said goodbye to the biggest investment of all the hedgies monitored by Insider Monkey, worth about $0.3 million in stock, and Israel Englander's Millennium Management was right behind this move, as the fund dropped about $0.2 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest was cut by 3 funds by the end of the third quarter.
Let's now take a look at hedge fund activity in other stocks similar to Winmark Corporation (NASDAQ:WINA). These stocks are HealthStream, Inc. (NASDAQ:HSTM), Petmed Express Inc (NASDAQ:PETS), Sinovac Biotech Ltd. (NASDAQ:SVA), Inogen Inc (NASDAQ:INGN), OFG Bancorp (NYSE:OFG), B. Riley Financial, Inc. (NASDAQ:RILY), and Pampa Energia S.A. (NYSE:PAM). This group of stocks' market caps are closest to WINA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position HSTM,14,57652,-3 PETS,19,112855,0 SVA,3,67010,0 INGN,19,37302,0 OFG,12,15248,1 RILY,19,88617,3 PAM,8,30973,-2 Average,13.4,58522,-0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.4 hedge funds with bullish positions and the average amount invested in these stocks was $59 million. That figure was $82 million in WINA's case. Petmed Express Inc (NASDAQ:PETS) is the most popular stock in this table. On the other hand Sinovac Biotech Ltd. (NASDAQ:SVA) is the least popular one with only 3 bullish hedge fund positions. Winmark Corporation (NASDAQ:WINA) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WINA is 47. 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 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 32.9% in 2020 through December 8th and surpassed the market again by 16.2 percentage points. Unfortunately WINA wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WINA investors were disappointed as the stock returned 8.4% since the end of September (through 12/8) 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.