Hedge Funds Have Never Been This Bullish On Werner Enterprises, Inc. (WERN)
We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended December 31, so let’s proceed with the discussion of the hedge fund sentiment on Werner Enterprises, Inc. (NASDAQ:WERN).
Werner Enterprises, Inc. (NASDAQ:WERN) has seen an increase in enthusiasm from smart money of late. Our calculations also showed that WERN isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
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 72.9% since March 2017 and outperformed the S&P 500 ETFs by more than 41 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
[caption id="attachment_30621" align="aligncenter" width="400"]
Cliff Asness of AQR Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic's significance before most investors. Keeping this in mind we're going to review the new hedge fund action surrounding Werner Enterprises, Inc. (NASDAQ:WERN).
What have hedge funds been doing with Werner Enterprises, Inc. (NASDAQ:WERN)?
At Q4's end, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in WERN over the last 18 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, AQR Capital Management held the most valuable stake in Werner Enterprises, Inc. (NASDAQ:WERN), which was worth $42.1 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $21.1 million worth of shares. Arrowstreet Capital, Royce & Associates, and Winton 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 Sandbar Asset Management allocated the biggest weight to Werner Enterprises, Inc. (NASDAQ:WERN), around 1.25% of its 13F portfolio. Cinctive Capital Management is also relatively very bullish on the stock, earmarking 0.6 percent of its 13F equity portfolio to WERN.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Winton Capital Management, managed by David Harding, initiated the biggest position in Werner Enterprises, Inc. (NASDAQ:WERN). Winton Capital Management had $11 million invested in the company at the end of the quarter. Richard SchimeláandáLawrence Sapanski's Cinctive Capital Management also made a $5.7 million investment in the stock during the quarter. The following funds were also among the new WERN investors: Minhua Zhang's Weld Capital Management and Matthew Tewksbury's Stevens Capital Management.
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Werner Enterprises, Inc. (NASDAQ:WERN) but similarly valued. We will take a look at Premier Inc (NASDAQ:PINC), Artisan Partners Asset Management Inc (NYSE:APAM), Box, Inc. (NYSE:BOX), and Genesis Energy, L.P. (NYSE:GEL). This group of stocks' market values are closest to WERN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PINC,14,219803,-7 APAM,16,265487,3 BOX,35,545303,2 GEL,1,17341,-1 Average,16.5,261984,-0.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $262 million. That figure was $141 million in WERN's case. Box, Inc. (NYSE:BOX) is the most popular stock in this table. On the other hand Genesis Energy, L.P. (NYSE:GEL) is the least popular one with only 1 bullish hedge fund positions. Werner Enterprises, Inc. (NASDAQ:WERN) is not the most popular stock in this group but hedge fund interest is still above average. 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 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but still beat the market by 5.5 percentage points. Hedge funds were also right about betting on WERN as the stock returned -3.8% during the first quarter (through March 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
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