We at Insider Monkey have gone over 730 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of June 28th. In this article, we look at what those funds think of Unum Group (NYSE:UNM) based on that data.
Unum Group (NYSE:UNM) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 25 hedge funds' portfolios at the end of June. At the end of this article we will also compare UNM to other stocks including ServiceMaster Global Holdings Inc (NYSE:SERV), EnCana Corporation (NYSE:ECA), and TIM Participacoes SA (NYSE:TSU) to get a better sense of its popularity. Our calculations also showed that UNM isn't among the 30 most popular stocks among hedge funds (see the video below) Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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. We're going to review the recent hedge fund action regarding Unum Group (NYSE:UNM).
What does smart money think about Unum Group (NYSE:UNM)?
At the end of the second quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the first quarter of 2019. Below, you can check out the change in hedge fund sentiment towards UNM over the last 16 quarters. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Arrowstreet Capital held the most valuable stake in Unum Group (NYSE:UNM), which was worth $105.4 million at the end of the second quarter. On the second spot was AQR Capital Management which amassed $83.7 million worth of shares. Moreover, Millennium Management, Renaissance Technologies, and D E Shaw were also bullish on Unum Group (NYSE:UNM), allocating a large percentage of their portfolios to this stock.
Due to the fact that Unum Group (NYSE:UNM) has witnessed a decline in interest from the smart money, we can see that there exists a select few hedgies that elected to cut their full holdings by the end of the second quarter. It's worth mentioning that Jeffrey Talpins's Element Capital Management dropped the largest stake of the 750 funds watched by Insider Monkey, valued at about $7.5 million in stock, and Ken Fisher's Fisher Asset Management was right behind this move, as the fund cut about $4.7 million worth. These bearish behaviors are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Unum Group (NYSE:UNM) but similarly valued. These stocks are ServiceMaster Global Holdings Inc (NYSE:SERV), EnCana Corporation (NYSE:ECA), TIM Participacoes SA (NYSE:TSU), and Medical Properties Trust, Inc. (NYSE:MPW). This group of stocks' market values are similar to UNM's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SERV,30,794886,6 ECA,32,464569,-12 TSU,12,306449,-4 MPW,13,169784,0 Average,21.75,433922,-2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $434 million. That figure was $494 million in UNM's case. EnCana Corporation (NYSE:ECA) is the most popular stock in this table. On the other hand TIM Participacoes SA (NYSE:TSU) is the least popular one with only 12 bullish hedge fund positions. Unum Group (NYSE:UNM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 UNM wasn't nearly as popular as these 20 stocks and hedge funds that were betting on UNM were disappointed as the stock returned -10.6% 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 among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
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