The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Waste Management, Inc. (NYSE:WM).
Is WM a good stock to buy? Waste Management, Inc. (NYSE:WM) investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. Waste Management, Inc. (NYSE:WM) was in 38 hedge funds' portfolios at the end of September. The all time high for this statistic is 52. Our calculations also showed that WM 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.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 15 best blue chip stocks to buy 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 check out the fresh hedge fund action regarding Waste Management, Inc. (NYSE:WM).
Do Hedge Funds Think WM Is A Good Stock To Buy Now?
At third quarter's end, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WM over the last 21 quarters. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Waste Management, Inc. (NYSE:WM) was held by Bill & Melinda Gates Foundation Trust, which reported holding $2108.8 million worth of stock at the end of September. It was followed by Impax Asset Management with a $165.6 million position. Other investors bullish on the company included AQR Capital Management, Two Sigma Advisors, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Bill & Melinda Gates Foundation Trust allocated the biggest weight to Waste Management, Inc. (NYSE:WM), around 9.55% of its 13F portfolio. Ecofin Ltd is also relatively very bullish on the stock, setting aside 2.24 percent of its 13F equity portfolio to WM.
Seeing as Waste Management, Inc. (NYSE:WM) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedge funds who were dropping their positions entirely heading into Q4. Interestingly, Phill Gross and Robert Atchinson's Adage Capital Management dumped the largest stake of the 750 funds followed by Insider Monkey, totaling close to $40.7 million in stock, and Ray Dalio's Bridgewater Associates was right behind this move, as the fund dropped about $1.6 million worth. These transactions are important to note, as total hedge fund interest dropped by 1 funds heading into Q4.
Let's go over hedge fund activity in other stocks similar to Waste Management, Inc. (NYSE:WM). These stocks are Aon plc (NYSE:AON), The Charles Schwab Corporation (NYSE:SCHW), PNC Financial Services Group Inc. (NYSE:PNC), Petroleo Brasileiro S.A. - Petrobras (NYSE:PBR), Ferrari N.V. (NYSE:RACE), Equinor ASA (NYSE:EQNR), and TAL Education Group (NYSE:TAL). All of these stocks' market caps are similar to WM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AON,52,5410949,-5 SCHW,53,3280246,-18 PNC,37,740197,-15 PBR,31,1006663,2 RACE,31,1322171,6 EQNR,20,324305,10 TAL,41,2136912,1 Average,37.9,2031635,-2.7 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.9 hedge funds with bullish positions and the average amount invested in these stocks was $2032 million. That figure was $2845 million in WM's case. The Charles Schwab Corporation (NYSE:SCHW) is the most popular stock in this table. On the other hand Equinor ASA (NYSE:EQNR) is the least popular one with only 20 bullish hedge fund positions. Waste Management, Inc. (NYSE:WM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WM is 53.2. 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 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 33.3% in 2020 through December 18th and beat the market again by 16.4 percentage points. Unfortunately WM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on WM were disappointed as the stock returned 4.2% since the end of September (through 12/18) 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.
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Disclosure: None. This article was originally published at Insider Monkey.