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WW International, Inc. (WW): Hedge Funds Are Cashing Out

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We at Insider Monkey have gone over 873 13F filings that hedge funds and prominent investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th. In this article, we look at what those funds think of WW International, Inc. (NASDAQ:WW) based on that data.

Is WW International, Inc. (NASDAQ:WW) a healthy stock for your portfolio? Hedge funds were taking a pessimistic view. The number of long hedge fund positions went down by 1 recently. WW International, Inc. (NASDAQ:WW) was in 27 hedge funds' portfolios at the end of June. The all time high for this statistic is 37. Our calculations also showed that WW isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 28 hedge funds in our database with WW positions at the end of the first quarter.

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 monthly stock picks returned 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Gabriel Plotkin Melvin Capital Management
Gabriel Plotkin Melvin Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we're going to review the recent hedge fund action surrounding WW International, Inc. (NASDAQ:WW).

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

At the end of June, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -4% from the previous quarter. By comparison, 26 hedge funds held shares or bullish call options in WW a year ago. With the smart money's capital changing hands, there exists an "upper tier" of key hedge fund managers who were upping their stakes significantly (or already accumulated large positions).

Is WW A Good Stock To Buy?
Is WW A Good Stock To Buy?

Among these funds, 0 held the most valuable stake in WW International, Inc. (NASDAQ:WW), which was worth $101.8 million at the end of the second quarter. On the second spot was Melvin Capital Management which amassed $101.2 million worth of shares. Rima Senvest Management, Sessa Capital, and Stadium Capital Management 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 Stadium Capital Management allocated the biggest weight to WW International, Inc. (NASDAQ:WW), around 32.83% of its 13F portfolio. ThornTree Capital Partners is also relatively very bullish on the stock, earmarking 3.92 percent of its 13F equity portfolio to WW.

Because WW International, Inc. (NASDAQ:WW) has witnessed a decline in interest from the smart money, logic holds that there was a specific group of hedge funds that decided to sell off their full holdings last quarter. At the top of the heap, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital dumped the largest position of the 750 funds watched by Insider Monkey, valued at close to $33 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also dumped its stock, about $6.7 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest dropped by 1 funds last quarter.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as WW International, Inc. (NASDAQ:WW) but similarly valued. We will take a look at RLJ Lodging Trust (NYSE:RLJ), California Resources Corporation (NYSE:CRC), TreeHouse Foods Inc. (NYSE:THS), Sinclair Broadcast Group, Inc. (NASDAQ:SBGI), Fluor Corporation (NYSE:FLR), Verra Mobility Corporation (NASDAQ:VRRM), and Independent Bank Corp (NASDAQ:INDB). This group of stocks' market caps are closest to WW's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RLJ,17,68350,3 CRC,20,589046,-3 THS,22,278636,-5 SBGI,20,484932,1 FLR,22,124101,5 VRRM,22,395107,4 INDB,13,47935,2 Average,19.4,284015,1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $284 million. That figure was $603 million in WW's case. TreeHouse Foods Inc. (NYSE:THS) is the most popular stock in this table. On the other hand Independent Bank Corp (NASDAQ:INDB) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks WW International, Inc. (NASDAQ:WW) is more popular among hedge funds. Our overall hedge fund sentiment score for WW is 75.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Unfortunately WW wasn't nearly as popular as these 5 stocks and hedge funds that were betting on WW were disappointed as the stock returned -49.2% since the end of the second quarter (through 10/15) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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