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Is WMK A Good Stock To Buy Now?

Reymerlyn Martin
·6 min read

In this article we will analyze whether Weis Markets, Inc. (NYSE:WMK) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is WMK a good stock to buy now? Weis Markets, Inc. (NYSE:WMK) investors should be aware of a decrease in support from the world's most elite money managers lately. Weis Markets, Inc. (NYSE:WMK) was in 15 hedge funds' portfolios at the end of September. The all time high for this statistic is 19. Our calculations also showed that WMK 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.

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. 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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

David Harding
David Harding

David Harding of Winton 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 15 best blue chip stocks 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. Now let's go over the key hedge fund action encompassing Weis Markets, Inc. (NYSE:WMK).

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

Heading into the fourth quarter of 2020, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of -21% from the previous quarter. On the other hand, there were a total of 16 hedge funds with a bullish position in WMK a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey's hedge fund database, Renaissance Technologies, founded by Jim Simons, holds the largest position in Weis Markets, Inc. (NYSE:WMK). Renaissance Technologies has a $23.7 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Renaissance Technologies's heels is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $6.8 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers that hold long positions encompass Mario Gabelli's GAMCO Investors, David Harding's Winton Capital Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Zebra Capital Management allocated the biggest weight to Weis Markets, Inc. (NYSE:WMK), around 1.08% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, designating 0.24 percent of its 13F equity portfolio to WMK.

Seeing as Weis Markets, Inc. (NYSE:WMK) has faced a decline in interest from the smart money, we can see that there were a few fund managers who were dropping their entire stakes heading into Q4. Intriguingly, Paul Marshall and Ian Wace's Marshall Wace LLP said goodbye to the biggest position of all the hedgies watched by Insider Monkey, totaling an estimated $2.2 million in stock, and Noam Gottesman's GLG Partners was right behind this move, as the fund dumped about $1.8 million worth. These transactions are important to note, as total hedge fund interest fell by 4 funds heading into Q4.

Let's check out hedge fund activity in other stocks similar to Weis Markets, Inc. (NYSE:WMK). These stocks are Arbor Realty Trust, Inc. (NYSE:ABR), AMC Networks Inc (NASDAQ:AMCX), Frontline Ltd (NYSE:FRO), WW International, Inc. (NASDAQ:WW), Alamo Group, Inc. (NYSE:ALG), Vasta Platform Limited (NASDAQ:VSTA), and Holly Energy Partners, L.P. (NYSE:HEP). All of these stocks' market caps match WMK's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ABR,11,49249,5 AMCX,28,218917,2 FRO,10,16368,-2 WW,27,219388,1 ALG,9,164770,-1 VSTA,8,41308,8 HEP,2,1314,0 Average,13.6,101616,1.9 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 13.6 hedge funds with bullish positions and the average amount invested in these stocks was $102 million. That figure was $46 million in WMK's case. AMC Networks Inc (NASDAQ:AMCX) is the most popular stock in this table. On the other hand Holly Energy Partners, L.P. (NYSE:HEP) is the least popular one with only 2 bullish hedge fund positions. Weis Markets, Inc. (NYSE:WMK) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WMK is 49.7. 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 30.7% in 2020 through December 14th and beat the market again by 15.8 percentage points. Unfortunately WMK wasn't nearly as popular as these 20 stocks and hedge funds that were betting on WMK were disappointed as the stock returned 3.6% since the end of September (through 12/14) 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.

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