The 700+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the second quarter, which unveil their equity positions as of June 28. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Wabtec Corporation (NYSE:WAB).
Is Wabtec Corporation (NYSE:WAB) the right investment to pursue these days? Prominent investors are in a pessimistic mood. The number of bullish hedge fund positions decreased by 9 recently. Our calculations also showed that WAB isn't among the 30 most popular stocks among hedge funds. WAB was in 27 hedge funds' portfolios at the end of June. There were 36 hedge funds in our database with WAB positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a gander at the new hedge fund action regarding Wabtec Corporation (NYSE:WAB).
How have hedgies been trading Wabtec Corporation (NYSE:WAB)?
At Q2's end, a total of 27 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in WAB over the last 16 quarters. With the smart money's positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
The largest stake in Wabtec Corporation (NYSE:WAB) was held by Farallon Capital, which reported holding $471.3 million worth of stock at the end of March. It was followed by Eagle Capital Management with a $244.7 million position. Other investors bullish on the company included Pzena Investment Management, Gates Capital Management, and FPR Partners.
Seeing as Wabtec Corporation (NYSE:WAB) has witnessed falling interest from the entirety of the hedge funds we track, we can see that there lies a certain "tier" of funds who were dropping their full holdings by the end of the second quarter. Interestingly, Peter Muller's PDT Partners dumped the biggest position of the "upper crust" of funds tracked by Insider Monkey, worth an estimated $9.7 million in stock, and Javier Velazquez's Albar Capital was right behind this move, as the fund sold off about $8.7 million worth. These transactions are important to note, as aggregate hedge fund interest was cut by 9 funds by the end of the second quarter.
Let's now take a look at hedge fund activity in other stocks similar to Wabtec Corporation (NYSE:WAB). These stocks are Sun Communities Inc (NYSE:SUI), Raymond James Financial, Inc. (NYSE:RJF), PG&E Corporation (NYSE:PCG), and ABIOMED, Inc. (NASDAQ:ABMD). This group of stocks' market values match WAB's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SUI,20,429029,2 RJF,35,764230,0 PCG,67,6316603,-5 ABMD,28,1005300,-5 Average,37.5,2128791,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 37.5 hedge funds with bullish positions and the average amount invested in these stocks was $2129 million. That figure was $1363 million in WAB's case. PG&E Corporation (NYSE:PCG) is the most popular stock in this table. On the other hand Sun Communities Inc (NYSE:SUI) is the least popular one with only 20 bullish hedge fund positions. Wabtec Corporation (NYSE:WAB) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately WAB wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WAB investors were disappointed as the stock returned 0.3% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks (see the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019. 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.