How do you pick the next stock to invest in? One way would be to spend days of research browsing through thousands of publicly traded companies. However, an easier way is to look at the stocks that smart money investors are collectively bullish on. Hedge funds and other institutional investors usually invest large amounts of capital and have to conduct due diligence while choosing their next pick. They don't always get it right, but, on average, their stock picks historically generated strong returns after adjusting for known risk factors. With this in mind, let’s take a look at the recent hedge fund activity surrounding Atlantic Union Bankshares Corporation (NASDAQ:AUB) and determine whether hedge funds had an edge regarding this stock.
Atlantic Union Bankshares Corporation (NASDAQ:AUB) was in 10 hedge funds' portfolios at the end of March. AUB investors should be aware of an increase in hedge fund interest of late. There were 8 hedge funds in our database with AUB positions at the end of the previous quarter. Our calculations also showed that AUB isn't among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). Video: Watch our video about the top 5 most popular hedge fund stocks.
According to most shareholders, hedge funds are perceived as unimportant, old investment vehicles of the past. While there are more than 8000 funds in operation at the moment, We hone in on the moguls of this group, around 850 funds. These hedge fund managers oversee the lion's share of all hedge funds' total asset base, and by following their top investments, Insider Monkey has revealed various investment strategies that have historically exceeded the S&P 500 index. Insider Monkey's flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .
[caption id="attachment_843278" align="aligncenter" width="400"] Fred Cummings of Elizabeth Park Capital[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a "weekend trading strategy", so we look into his strategy's picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller's investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a glance at the key hedge fund action regarding Atlantic Union Bankshares Corporation (NASDAQ:AUB).
Hedge fund activity in Atlantic Union Bankshares Corporation (NASDAQ:AUB)
At the end of the first quarter, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from one quarter earlier. On the other hand, there were a total of 7 hedge funds with a bullish position in AUB a year ago. With hedge funds' sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of Atlantic Union Bankshares Corporation (NASDAQ:AUB), with a stake worth $6.3 million reported as of the end of September. Trailing Renaissance Technologies was Citadel Investment Group, which amassed a stake valued at $2.8 million. Marshall Wace LLP, D E Shaw, and GLG Partners 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 AlphaCrest Capital Management allocated the biggest weight to Atlantic Union Bankshares Corporation (NASDAQ:AUB), around 0.04% of its 13F portfolio. PDT Partners is also relatively very bullish on the stock, dishing out 0.02 percent of its 13F equity portfolio to AUB.
Consequently, key money managers have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most valuable position in Atlantic Union Bankshares Corporation (NASDAQ:AUB). Marshall Wace LLP had $2.2 million invested in the company at the end of the quarter. D. E. Shaw's D E Shaw also initiated a $1.1 million position during the quarter. The other funds with brand new AUB positions are Noam Gottesman's GLG Partners, Peter Muller's PDT Partners, and Fred Cummings's Elizabeth Park Capital Management.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Atlantic Union Bankshares Corporation (NASDAQ:AUB) but similarly valued. These stocks are Cimarex Energy Co (NYSE:XEC), American Equity Investment Life Holding Company (NYSE:AEL), Innospec Inc. (NASDAQ:IOSP), and Papa John's International, Inc. (NASDAQ:PZZA). This group of stocks' market valuations match AUB's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position XEC,35,398770,2 AEL,12,43458,-5 IOSP,14,70798,-4 PZZA,29,251238,1 Average,22.5,191066,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $191 million. That figure was $15 million in AUB's case. Cimarex Energy Co (NYSE:XEC) is the most popular stock in this table. On the other hand American Equity Investment Life Holding Company (NYSE:AEL) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Atlantic Union Bankshares Corporation (NASDAQ:AUB) is even less popular than AEL. Hedge funds dodged a bullet by taking a bearish stance towards AUB. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but managed to beat the market by 15.5 percentage points. Unfortunately AUB wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); AUB investors were disappointed as the stock returned 7% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.
Get real-time email alerts: Follow Atlantic Union Bankshares Corp (NASDAQ:AUB)
Disclosure: None. This article was originally published at Insider Monkey.