Hedge Funds Aren’t Crazy About Wheaton Precious Metals Corp. (WPM) Anymore

·6 min read

The Insider Monkey team has completed processing the quarterly 13F filings for the June quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Wheaton Precious Metals Corp. (NYSE:WPM).

Wheaton Precious Metals Corp. (NYSE:WPM) investors should pay attention to a decrease in activity from the world's largest hedge funds recently. Wheaton Precious Metals Corp. (NYSE:WPM) was in 26 hedge funds' portfolios at the end of June. The all time high for this statistic is 34. Our calculations also showed that WPM isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.

David Iben of Kopernik Global Investors

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. Keeping this in mind we're going to analyze the latest hedge fund action surrounding Wheaton Precious Metals Corp. (NYSE:WPM).

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

At the end of the second quarter, a total of 26 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from one quarter earlier. By comparison, 21 hedge funds held shares or bullish call options in WPM a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Horizon Asset Management, managed by Murray Stahl, holds the number one position in Wheaton Precious Metals Corp. (NYSE:WPM). Horizon Asset Management has a $129.7 million position in the stock, comprising 2.6% of its 13F portfolio. Coming in second is Kopernik Global Investors, led by David Iben, holding a $71.6 million position; 7.5% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions comprise Renaissance Technologies, Eric Sprott's Sprott Asset Management and Ken Griffin's Citadel Investment Group. In terms of the portfolio weights assigned to each position Kopernik Global Investors allocated the biggest weight to Wheaton Precious Metals Corp. (NYSE:WPM), around 7.51% of its 13F portfolio. Moerus Capital Management is also relatively very bullish on the stock, dishing out 5.98 percent of its 13F equity portfolio to WPM.

Because Wheaton Precious Metals Corp. (NYSE:WPM) has experienced a decline in interest from the smart money, it's easy to see that there were a few fund managers who sold off their positions entirely last quarter. Interestingly, D. E. Shaw's D E Shaw said goodbye to the biggest investment of all the hedgies followed by Insider Monkey, worth an estimated $2.7 million in stock. Michael Gelband's fund, ExodusPoint Capital, also dumped its stock, about $1.2 million worth. These moves are interesting, as total hedge fund interest was cut by 2 funds last quarter.

Let's now take a look at hedge fund activity in other stocks similar to Wheaton Precious Metals Corp. (NYSE:WPM). These stocks are Devon Energy Corporation (NYSE:DVN), Albemarle Corporation (NYSE:ALB), Tradeweb Markets Inc. (NASDAQ:TW), Qualtrics International Inc. (NASDAQ:XM), Ubiquiti Inc. (NYSE:UI), Citizens Financial Group Inc (NYSE:CFG), and Restaurant Brands International Inc (NYSE:QSR). This group of stocks' market caps resemble WPM's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DVN,50,1039305,-2 ALB,28,165344,-3 TW,15,164110,-11 XM,37,2430220,0 UI,23,285947,4 CFG,36,402274,-5 QSR,22,2007862,-4 Average,30.1,927866,-3 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 30.1 hedge funds with bullish positions and the average amount invested in these stocks was $928 million. That figure was $472 million in WPM's case. Devon Energy Corporation (NYSE:DVN) is the most popular stock in this table. On the other hand Tradeweb Markets Inc. (NASDAQ:TW) is the least popular one with only 15 bullish hedge fund positions. Wheaton Precious Metals Corp. (NYSE:WPM) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WPM is 41.7. 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. 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 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 surpassed the market again by 4.5 percentage points. Unfortunately WPM wasn't nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); WPM investors were disappointed as the stock returned -6.6% since the end of June (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 in 2021.

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

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