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The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 817 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of September 30th, about a month before the elections. In this article we look at what those investors think of W&T Offshore, Inc. (NYSE:WTI).
Is WTI a good stock to buy now? W&T Offshore, Inc. (NYSE:WTI) was in 8 hedge funds' portfolios at the end of September. The all time high for this statistics is 24. WTI has experienced a decrease in hedge fund interest of late. There were 15 hedge funds in our database with WTI holdings at the end of June. Our calculations also showed that WTI 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
David Siegel of Two Sigma Advisors
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 analyze the fresh hedge fund action encompassing W&T Offshore, Inc. (NYSE:WTI).
How have hedgies been trading W&T Offshore, Inc. (NYSE:WTI)?
Heading into the fourth quarter of 2020, a total of 8 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -47% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WTI 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.
Among these funds, GLG Partners held the most valuable stake in W&T Offshore, Inc. (NYSE:WTI), which was worth $5.9 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $4 million worth of shares. Two Sigma Advisors, Millennium Management, and Courage Capital 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 Courage Capital allocated the biggest weight to W&T Offshore, Inc. (NYSE:WTI), around 0.4% of its 13F portfolio. Algert Coldiron Investors is also relatively very bullish on the stock, earmarking 0.02 percent of its 13F equity portfolio to WTI.
Seeing as W&T Offshore, Inc. (NYSE:WTI) has witnessed a decline in interest from the smart money, we can see that there is a sect of hedge funds that elected to cut their full holdings by the end of the third quarter. Intriguingly, Renaissance Technologies said goodbye to the biggest investment of the 750 funds monitored by Insider Monkey, worth close to $4.5 million in stock, and Ken Griffin's Citadel Investment Group was right behind this move, as the fund said goodbye to about $2.1 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 7 funds by the end of the third quarter.
Let's go over hedge fund activity in other stocks similar to W&T Offshore, Inc. (NYSE:WTI). We will take a look at MOGU Inc. (NYSE:MOGU), Limoneira Company (NASDAQ:LMNR), Denison Mines Corp (NYSE:DNN), Whitestone REIT (NYSE:WSR), Liquidity Services, Inc. (NASDAQ:LQDT), Radiant Logistics, Inc. (NYSE:RLGT), and Peoples Financial Services Corp. (NASDAQ:PFIS). All of these stocks' market caps are closest to WTI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MOGU,6,29948,4 LMNR,2,679,-3 DNN,6,4815,2 WSR,8,9493,-1 LQDT,14,26500,5 RLGT,14,11973,4 PFIS,1,1911,0 Average,7.3,12188,1.6 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.3 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $12 million in WTI's case. Liquidity Services, Inc. (NASDAQ:LQDT) is the most popular stock in this table. On the other hand Peoples Financial Services Corp. (NASDAQ:PFIS) is the least popular one with only 1 bullish hedge fund positions. W&T Offshore, Inc. (NYSE:WTI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WTI is 34.9. 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. 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 31.6% in 2020 through December 2nd and still beat the market by 16 percentage points. Hedge funds were also right about betting on WTI as the stock returned 14.4% since the end of Q3 (through 12/2) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.