In this article we will check out the progression of hedge fund sentiment towards Urstadt Biddle Properties Inc (NYSE:UBA) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.
Urstadt Biddle Properties Inc (NYSE:UBA) shareholders have witnessed an increase in enthusiasm from smart money in recent months. UBA was in 8 hedge funds' portfolios at the end of the first quarter of 2020. There were 6 hedge funds in our database with UBA holdings at the end of the previous quarter. Our calculations also showed that UBA 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.
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 S&P 500 ETFs by 58 percentage points since March 2017 (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.
[caption id="attachment_189632" align="aligncenter" width="392"] David Harding of Winton Capital Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we're going to view the latest hedge fund action encompassing Urstadt Biddle Properties Inc (NYSE:UBA).
Hedge fund activity in Urstadt Biddle Properties Inc (NYSE:UBA)
At Q1's end, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the fourth quarter of 2019. By comparison, 8 hedge funds held shares or bullish call options in UBA a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Urstadt Biddle Properties Inc (NYSE:UBA) was held by Renaissance Technologies, which reported holding $20 million worth of stock at the end of September. It was followed by Millennium Management with a $2.9 million position. Other investors bullish on the company included AQR Capital Management, Winton Capital Management, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Winton Capital Management allocated the biggest weight to Urstadt Biddle Properties Inc (NYSE:UBA), around 0.02% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to UBA.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Urstadt Biddle Properties Inc (NYSE:UBA) headfirst. Millennium Management, managed by Israel Englander, initiated the biggest position in Urstadt Biddle Properties Inc (NYSE:UBA). Millennium Management had $2.9 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also initiated a $0.7 million position during the quarter. The only other fund with a new position in the stock is Paul Tudor Jones's Tudor Investment Corp.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Urstadt Biddle Properties Inc (NYSE:UBA) but similarly valued. These stocks are NOW Inc (NYSE:DNOW), TORM plc (NASDAQ:TRMD), Invesco Mortgage Capital Inc (NYSE:IVR), and Ambac Financial Group, Inc. (NYSE:AMBC). This group of stocks' market caps are similar to UBA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position DNOW,19,55284,-2 TRMD,4,419530,1 IVR,15,19381,0 AMBC,15,51461,0 Average,13.25,136414,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.25 hedge funds with bullish positions and the average amount invested in these stocks was $136 million. That figure was $26 million in UBA's case. NOW Inc (NYSE:DNOW) is the most popular stock in this table. On the other hand TORM plc (NASDAQ:TRMD) is the least popular one with only 4 bullish hedge fund positions. Urstadt Biddle Properties Inc (NYSE:UBA) 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.2% in 2020 through June 17th and surpassed the market by 14.8 percentage points. Unfortunately UBA wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); UBA investors were disappointed as the stock returned -9.7% 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 in 2020.
Disclosure: None. This article was originally published at Insider Monkey.