Legendary investors such as Jeffrey Talpins and Seth Klarman earn enormous amounts of money for themselves and their investors by doing in-depth research on small-cap stocks that big brokerage houses don't publish. Small cap stocks -especially when they are screened well- can generate substantial outperformance versus a boring index fund. That's why we analyze the activity of those elite funds in these small-cap stocks. In the following paragraphs, we analyze Wolverine World Wide, Inc. (NYSE:WWW) from the perspective of those elite funds.
Wolverine World Wide, Inc. (NYSE:WWW) was in 12 hedge funds' portfolios at the end of the second quarter of 2019. WWW has seen a decrease in support from the world's most elite money managers in recent months. There were 19 hedge funds in our database with WWW positions at the end of the previous quarter. Our calculations also showed that WWW isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to 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 flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a peek at the new hedge fund action encompassing Wolverine World Wide, Inc. (NYSE:WWW).
How are hedge funds trading Wolverine World Wide, Inc. (NYSE:WWW)?
Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -37% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WWW over the last 16 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Royce & Associates was the largest shareholder of Wolverine World Wide, Inc. (NYSE:WWW), with a stake worth $26 million reported as of the end of March. Trailing Royce & Associates was Citadel Investment Group, which amassed a stake valued at $5.4 million. GAMCO Investors, GLG Partners, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
Seeing as Wolverine World Wide, Inc. (NYSE:WWW) has experienced a decline in interest from the smart money, we can see that there is a sect of hedgies that elected to cut their entire stakes last quarter. Interestingly, David Harding's Winton Capital Management cut the largest position of the "upper crust" of funds monitored by Insider Monkey, comprising about $10.9 million in stock. Paul Marshall and Ian Wace's fund, Marshall Wace LLP, also dumped its stock, about $7.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 7 funds last quarter.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Wolverine World Wide, Inc. (NYSE:WWW) but similarly valued. We will take a look at Prospect Capital Corporation (NASDAQ:PSEC), Premier Inc (NASDAQ:PINC), SITE Centers Corp. (NYSE:SITC), and CoreCivic, Inc. (NYSE:CXW). This group of stocks' market values resemble WWW's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PSEC,11,22786,0 PINC,16,198348,0 SITC,15,53109,1 CXW,14,147007,0 Average,14,105313,0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $105 million. That figure was $49 million in WWW's case. Premier Inc (NASDAQ:PINC) is the most popular stock in this table. On the other hand Prospect Capital Corporation (NASDAQ:PSEC) is the least popular one with only 11 bullish hedge fund positions. Wolverine World Wide, Inc. (NYSE:WWW) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. A small number of hedge funds were also right about betting on WWW, though not to the same extent, as the stock returned 3% during the third quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.