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Woori Financial Group Inc. (WF): Hedge Funds Are In Wait-and-See Mode

Abigail Fisher
·6 min read

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 March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Woori Financial Group Inc. (NYSE:WF) based on those filings.

Hedge fund interest in Woori Financial Group Inc. (NYSE:WF) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Quanta Services Inc (NYSE:PWR), Etsy Inc (NASDAQ:ETSY), and XPO Logistics Inc (NYSE:XPO) to gather more data points. Our calculations also showed that WF isn't among the 30 most popular stocks among hedge funds (click for Q1 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 44 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 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

[caption id="attachment_746893" align="aligncenter" width="399"] Paul Marshall of Marshall Wace[/caption]

Paul Marshall Marshall Wace
Paul Marshall Marshall Wace

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let's take a peek at the new hedge fund action regarding Woori Financial Group Inc. (NYSE:WF).

How are hedge funds trading Woori Financial Group Inc. (NYSE:WF)?

Heading into the second quarter of 2020, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 1 hedge funds held shares or bullish call options in WF a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Arrowstreet Capital held the most valuable stake in Woori Financial Group Inc. (NYSE:WF), which was worth $2.3 million at the end of the third quarter. On the second spot was Marshall Wace LLP which amassed $0 million worth of shares. Bourgeon Capital was 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 Bourgeon Capital allocated the biggest weight to Woori Financial Group Inc. (NYSE:WF), around 0.01% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to WF.

We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Millennium Management. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Bourgeon Capital).

Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Woori Financial Group Inc. (NYSE:WF) but similarly valued. These stocks are Quanta Services Inc (NYSE:PWR), Etsy Inc (NASDAQ:ETSY), XPO Logistics Inc (NYSE:XPO), and FTI Consulting, Inc. (NYSE:FCN). All of these stocks' market caps are closest to WF's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PWR,28,1509183,-16 ETSY,38,712742,-8 XPO,36,1719666,4 FCN,19,175190,-2 Average,30.25,1029195,-5.5 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.25 hedge funds with bullish positions and the average amount invested in these stocks was $1029 million. That figure was $2 million in WF's case. Etsy Inc (NASDAQ:ETSY) is the most popular stock in this table. On the other hand FTI Consulting, Inc. (NYSE:FCN) is the least popular one with only 19 bullish hedge fund positions. Compared to these stocks Woori Financial Group Inc. (NYSE:WF) is even less popular than FCN. Hedge funds dodged a bullet by taking a bearish stance towards WF. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 7.9% in 2020 through May 22nd but managed to beat the market by 15.6 percentage points. Unfortunately WF wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); WF investors were disappointed as the stock returned 1.7% during the second quarter (through May 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

Disclosure: None. This article was originally published at Insider Monkey.

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