Should I Buy World Wrestling Entertainment, Inc. (WWE)?

·6 min read

Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about World Wrestling Entertainment, Inc. (NYSE:WWE).

World Wrestling Entertainment, Inc. (NYSE:WWE) shareholders have witnessed an increase in hedge fund sentiment in recent months. World Wrestling Entertainment, Inc. (NYSE:WWE) was in 33 hedge funds' portfolios at the end of the second quarter of 2021. The all time high for this statistic is 47. There were 25 hedge funds in our database with WWE positions at the end of the first quarter. Our calculations also showed that WWE isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

To most traders, hedge funds are seen as underperforming, outdated financial tools of yesteryear. While there are greater than 8000 funds with their doors open at present, Our experts look at the bigwigs of this club, about 850 funds. These money managers administer bulk of the smart money's total asset base, and by paying attention to their best picks, Insider Monkey has unearthed various investment strategies that have historically outrun the S&P 500 index. Insider Monkey's flagship short hedge fund strategy outpaced the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Also, our monthly newsletter's portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Seth Fischer Oasis Management
Seth Fischer Oasis Management

Seth Fischer of Oasis 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 take a peek at the new hedge fund action surrounding World Wrestling Entertainment, Inc. (NYSE:WWE).

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

At the end of June, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 32% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards WWE over the last 24 quarters. With hedgies' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).

The largest stake in World Wrestling Entertainment, Inc. (NYSE:WWE) was held by 0, which reported holding $49.1 million worth of stock at the end of June. It was followed by Solus Alternative Asset Management with a $32.4 million position. Other investors bullish on the company included Two Sigma Advisors, Marathon Partners, and Royce & Associates. In terms of the portfolio weights assigned to each position Solus Alternative Asset Management allocated the biggest weight to World Wrestling Entertainment, Inc. (NYSE:WWE), around 8.87% of its 13F portfolio. Marathon Partners is also relatively very bullish on the stock, setting aside 6.73 percent of its 13F equity portfolio to WWE.

Now, key hedge funds have been driving this bullishness. Chiron Investment Management, managed by Ryan Caldwell, assembled the largest position in World Wrestling Entertainment, Inc. (NYSE:WWE). Chiron Investment Management had $15.2 million invested in the company at the end of the quarter. Michael Gelband's ExodusPoint Capital also made a $1.1 million investment in the stock during the quarter. The other funds with brand new WWE positions are Matthew Hulsizer's PEAK6 Capital Management, Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, and Seth Fischer's Oasis Management.

Let's also examine hedge fund activity in other stocks similar to World Wrestling Entertainment, Inc. (NYSE:WWE). These stocks are CMC Materials, Inc. (NASDAQ:CCMP), National Beverage Corp. (NASDAQ:FIZZ), MACOM Technology Solutions Holdings Inc (NASDAQ:MTSI), Sonos, Inc. (NASDAQ:SONO), ACI Worldwide Inc (NASDAQ:ACIW), Alignment Healthcare, Inc. (NASDAQ:ALHC), and ICU Medical, Inc. (NASDAQ:ICUI). This group of stocks' market caps resemble WWE's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CCMP,22,216493,3 FIZZ,21,259810,6 MTSI,24,193369,-6 SONO,47,666961,1 ACIW,26,658955,3 ALHC,4,26081,-13 ICUI,27,324811,1 Average,24.4,335211,-0.7 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.4 hedge funds with bullish positions and the average amount invested in these stocks was $335 million. That figure was $257 million in WWE's case. Sonos, Inc. (NASDAQ:SONO) is the most popular stock in this table. On the other hand Alignment Healthcare, Inc. (NASDAQ:ALHC) is the least popular one with only 4 bullish hedge fund positions. World Wrestling Entertainment, Inc. (NYSE:WWE) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for WWE is 64.8. 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. Hedge funds were also right about betting on WWE as the stock returned 3% since the end of Q2 (through 10/15) 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.

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