Is Wayside Technology Group, Inc. (WSTG) A Good Stock To Buy Now?
The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th, about a month before the elections. We at Insider Monkey have made an extensive database of more than 817 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Wayside Technology Group, Inc. (NASDAQ:WSTG) based on those filings.
Wayside Technology Group, Inc. (NASDAQ:WSTG) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 3 hedge funds' portfolios at the end of the third quarter of 2020. Our calculations also showed that WSTG isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). At the end of this article we will also compare WSTG to other stocks including Partners Bancorp (NASDAQ:PTRS), Gritstone Oncology, Inc. (NASDAQ:GRTS), and Arlington Asset Investment Corp (NYSE:AI) to get a better sense of its popularity.
Video: Watch our video about the top 5 most popular hedge fund stocks.
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 113% since March 2017 and outperformed the S&P 500 ETFs by more than 66 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.
Fred DiSanto of Ancora Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. 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 website. Keeping this in mind let's view the key hedge fund action surrounding Wayside Technology Group, Inc. (NASDAQ:WSTG).
How are hedge funds trading Wayside Technology Group, Inc. (NASDAQ:WSTG)?
At the end of September, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from one quarter earlier. By comparison, 2 hedge funds held shares or bullish call options in WSTG a year ago. With hedge funds' capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Wayside Technology Group, Inc. (NASDAQ:WSTG), with a stake worth $6.3 million reported as of the end of September. Trailing Renaissance Technologies was Steamboat Capital Partners, which amassed a stake valued at $0.7 million. Ancora Advisors was 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 Steamboat Capital Partners allocated the biggest weight to Wayside Technology Group, Inc. (NASDAQ:WSTG), around 0.12% of its 13F portfolio. Ancora Advisors is also relatively very bullish on the stock, setting aside 0.01 percent of its 13F equity portfolio to WSTG.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Springbok Capital. One hedge fund selling its entire position doesn't always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don't think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Ancora Advisors).
Let's now review hedge fund activity in other stocks similar to Wayside Technology Group, Inc. (NASDAQ:WSTG). We will take a look at Partners Bancorp (NASDAQ:PTRS), Gritstone Oncology, Inc. (NASDAQ:GRTS), Arlington Asset Investment Corp (NYSE:AI), Cogent Biosciences, Inc. (NASDAQ:UMRX), Almaden Minerals Ltd. (NYSE:AAU), Luokung Technology Corp (NASDAQ:LKCO), and The New Home Company Inc (NYSE:NWHM). This group of stocks' market caps are closest to WSTG's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PTRS,1,88,0 GRTS,7,15279,-5 AI,5,2209,0 UMRX,10,49323,8 AAU,3,3738,0 LKCO,1,217,-1 NWHM,7,9971,1 Average,4.9,11546,0.4 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.9 hedge funds with bullish positions and the average amount invested in these stocks was $12 million. That figure was $7 million in WSTG's case. Cogent Biosciences, Inc. (NASDAQ:UMRX) is the most popular stock in this table. On the other hand Partners Bancorp (NASDAQ:PTRS) is the least popular one with only 1 bullish hedge fund positions. Wayside Technology Group, Inc. (NASDAQ:WSTG) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for WSTG is 46.1. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 28.1% in 2020 through November 23rd and surpassed the market again by 15.4 percentage points. Unfortunately WSTG wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); WSTG investors were disappointed as the stock returned -8.3% since the end of September (through 11/23) 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 among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
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