With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the second quarter. One of these stocks was Urstadt Biddle Properties Inc. (NYSE:UBP).
Urstadt Biddle Properties Inc. (NYSE:UBP) shares haven't seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 2 hedge funds' portfolios at the end of September. The level and the change in hedge fund popularity aren't the only variables you need to analyze to decipher hedge funds' perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That's why at the end of this article we will examine companies such as Gladstone Commercial Corporation (NASDAQ:GOOD), Univest Corp. of PA (NASDAQ:UVSP), and CIRCOR International, Inc. (NYSE:CIR) to gather more data points. Our calculations also showed that UBP 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
[caption id="attachment_26073" align="aligncenter" width="600"] Jim Simons of RENAISSANCE TECHNOLOGIES[/caption]
Let's take a peek at the recent hedge fund action regarding Urstadt Biddle Properties Inc. (NYSE:UBP).
Hedge fund activity in Urstadt Biddle Properties Inc. (NYSE:UBP)
At Q3's end, a total of 2 of the hedge funds tracked by Insider Monkey were long this stock, the same as the second quarter of 2019. By comparison, 2 hedge funds held shares or bullish call options in UBP a year ago. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Urstadt Biddle Properties Inc. (NYSE:UBP) was held by Forward Management, which reported holding $11.4 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $1.4 million position.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren't any hedge funds dumping their holdings during the third quarter, there weren't any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven't identified any viable catalysts that can attract investor attention.
Let's now take a look at hedge fund activity in other stocks similar to Urstadt Biddle Properties Inc. (NYSE:UBP). We will take a look at Gladstone Commercial Corporation (NASDAQ:GOOD), Univest Financial Corporation (NASDAQ:UVSP), CIRCOR International, Inc. (NYSE:CIR), and Ameresco Inc (NYSE:AMRC). This group of stocks' market valuations are closest to UBP's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GOOD,5,72623,0 UVSP,10,50323,1 CIR,13,132391,3 AMRC,6,33172,1 Average,8.5,72127,1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.5 hedge funds with bullish positions and the average amount invested in these stocks was $72 million. That figure was $13 million in UBP's case. CIRCOR International, Inc. (NYSE:CIR) is the most popular stock in this table. On the other hand Gladstone Commercial Corporation (NASDAQ:GOOD) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Urstadt Biddle Properties Inc. (NYSE:UBP) is even less popular than GOOD. Hedge funds dodged a bullet by taking a bearish stance towards UBP. Our calculations showed that the top 20 most popular hedge fund stocks returned 34.7% in 2019 through November 22nd and outperformed the S&P 500 ETF (SPY) by 8.5 percentage points. Unfortunately UBP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); UBP investors were disappointed as the stock returned -1.1% during the fourth quarter (through 11/22) 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 70 percent of these stocks already outperformed the market so far in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
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