With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was WNS (Holdings) Limited (NYSE:WNS).
Is WNS a good stock to buy now? Hedge funds were in an optimistic mood. The number of long hedge fund positions moved up by 1 lately. WNS (Holdings) Limited (NYSE:WNS) was in 21 hedge funds' portfolios at the end of September. The all time high for this statistic is 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that WNS 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 a multitude of metrics investors can use to assess stocks. Two of the most underrated metrics are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite fund managers can outpace the market by a healthy amount (see the details here).
Ian Wace of Marshall Wace
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 take a gander at the fresh hedge fund action surrounding WNS (Holdings) Limited (NYSE:WNS).
Do Hedge Funds Think WNS Is A Good Stock To Buy Now?
At third quarter's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from one quarter earlier. By comparison, 19 hedge funds held shares or bullish call options in WNS a year ago. So, let's review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in WNS (Holdings) Limited (NYSE:WNS), which was worth $89.4 million at the end of the third quarter. On the second spot was Diamond Hill Capital which amassed $57.6 million worth of shares. Arrowstreet Capital, GLG Partners, and Marshall Wace LLP 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 Provenire Capital allocated the biggest weight to WNS (Holdings) Limited (NYSE:WNS), around 3.99% of its 13F portfolio. Old Well Partners is also relatively very bullish on the stock, setting aside 3.68 percent of its 13F equity portfolio to WNS.
As industrywide interest jumped, some big names have been driving this bullishness. GLG Partners, managed by Noam Gottesman, created the most valuable position in WNS (Holdings) Limited (NYSE:WNS). GLG Partners had $16.4 million invested in the company at the end of the quarter. Anthony S. Daffer's Provenire Capital also initiated a $3.4 million position during the quarter. The following funds were also among the new WNS investors: Israel Englander's Millennium Management, Donald Sussman's Paloma Partners, and Ryan Tolkin (CIO)'s Schonfeld Strategic Advisors.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as WNS (Holdings) Limited (NYSE:WNS) but similarly valued. These stocks are Goosehead Insurance, Inc. (NASDAQ:GSHD), Affiliated Managers Group, Inc. (NYSE:AMG), KBR, Inc. (NYSE:KBR), Portland General Electric Company (NYSE:POR), SAGE Therapeutics Inc (NASDAQ:SAGE), Safehold Inc. (NYSE:SAFE), and Vivint Smart Home, Inc. (NYSE:VVNT). All of these stocks' market caps are closest to WNS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GSHD,22,142736,7 AMG,23,312850,-4 KBR,38,625767,3 POR,24,178843,3 SAGE,34,716348,4 SAFE,7,7299,0 VVNT,5,8042,0 Average,21.9,284555,1.9 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.9 hedge funds with bullish positions and the average amount invested in these stocks was $285 million. That figure was $265 million in WNS's case. KBR, Inc. (NYSE:KBR) is the most popular stock in this table. On the other hand Vivint Smart Home, Inc. (NYSE:VVNT) is the least popular one with only 5 bullish hedge fund positions. WNS (Holdings) Limited (NYSE:WNS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WNS is 60.2. 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 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 30.7% in 2020 through December 14th and surpassed the market again by 15.8 percentage points. Unfortunately WNS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WNS investors were disappointed as the stock returned 7.9% 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 most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.