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Did Hedge Funds Drop The Ball On Urban Edge Properties (UE) ?

Nina Todic

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The Standard and Poor’s 500 Index returned approximately 20% in the first 9 months of this year (through September 30th). Conversely, hedge funds’ top 20 large-cap stock picks generated a return of 24% during the same 9-month period, with the majority of these stock picks outperforming the broader market benchmark. Coincidence? It might happen to be so, but it is unlikely. Our research covering the last 18 years indicates that hedge funds' consensus stock picks generate superior risk-adjusted returns. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Urban Edge Properties (NYSE:UE).

Is Urban Edge Properties (NYSE:UE) worth your attention right now? Money managers are selling. The number of long hedge fund positions dropped by 2 in recent months. Our calculations also showed that UE isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

5 Most Popular Stocks Among Hedge Funds

To most investors, hedge funds are seen as worthless, old financial vehicles of the past. While there are more than 8000 funds in operation today, Our experts hone in on the leaders of this group, approximately 750 funds. These hedge fund managers handle the majority of all hedge funds' total capital, and by following their top equity investments, Insider Monkey has determined a number of investment strategies that have historically surpassed the market. Insider Monkey's flagship hedge fund strategy outperformed the S&P 500 index by around 5 percentage points annually since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .

Clint Carlson, Carlson Capital

Unlike former hedge manager, Dr. Steve Sjuggerud, 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. Let's take a peek at the recent hedge fund action encompassing Urban Edge Properties (NYSE:UE).

What have hedge funds been doing with Urban Edge Properties (NYSE:UE)?

Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in UE 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.

No of Hedge Funds with UE Positions

More specifically, Long Pond Capital was the largest shareholder of Urban Edge Properties (NYSE:UE), with a stake worth $34.7 million reported as of the end of March. Trailing Long Pond Capital was Carlson Capital, which amassed a stake valued at $22.8 million. Renaissance Technologies, Balyasny Asset Management, and Two Sigma Advisors were also very fond of the stock, giving the stock large weights in their portfolios.

Due to the fact that Urban Edge Properties (NYSE:UE) has faced falling interest from the entirety of the hedge funds we track, it's safe to say that there was a specific group of money managers who were dropping their positions entirely last quarter. At the top of the heap, Benjamin A. Smith's Laurion Capital Management said goodbye to the biggest position of the 750 funds tracked by Insider Monkey, totaling close to $5.9 million in stock, and Matthew Tewksbury's Stevens Capital Management was right behind this move, as the fund dumped about $1.4 million worth. These moves are interesting, as aggregate hedge fund interest fell by 2 funds last quarter.

Let's go over hedge fund activity in other stocks similar to Urban Edge Properties (NYSE:UE). These stocks are WesBanco, Inc. (NASDAQ:WSBC), Insight Enterprises, Inc. (NASDAQ:NSIT), Zogenix, Inc. (NASDAQ:ZGNX), and Amneal Pharmaceuticals, Inc. (NYSE:AMRX). All of these stocks' market caps resemble UE's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position WSBC,10,73062,2 NSIT,14,121508,-3 ZGNX,28,1046228,-9 AMRX,10,36610,2 Average,15.5,319352,-2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $319 million. That figure was $122 million in UE's case. Zogenix, Inc. (NASDAQ:ZGNX) is the most popular stock in this table. On the other hand WesBanco, Inc. (NASDAQ:WSBC) is the least popular one with only 10 bullish hedge fund positions. Urban Edge Properties (NYSE:UE) is not the least popular stock in this group but hedge fund interest is still below average. 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. A small number of hedge funds were also right about betting on UE as the stock returned 15.5% during the same time frame and outperformed the market by an even larger margin.

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

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