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The latest 13F reporting period has come and gone, and Insider Monkey have plowed through 823 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds' and investors' portfolio positions as of June 30th, when the S&P 500 Index was trading around the 3100 level. Since the end of March, investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned more than 50% since its bottom. In this article you are going to find out whether hedge funds thought Urban Edge Properties (NYSE:UE) was a good investment heading into the third quarter and how the stock traded in comparison to the top hedge fund picks.
Is Urban Edge Properties (NYSE:UE) ready to rally soon? The best stock pickers were in an optimistic mood. The number of long hedge fund positions moved up by 4 in recent months. Urban Edge Properties (NYSE:UE) was in 25 hedge funds' portfolios at the end of June. The all time high for this statistics is 21. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that UE isn't among the 30 most popular stocks among hedge funds (click for Q2 rankings and see the video for a quick look at the top 5 stocks). There were 21 hedge funds in our database with UE positions at the end of the first quarter.
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 56 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Charles Davidson of Wexford Capital
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world to pick the best large-cap stocks to buy. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website to get excerpts of these letters in your inbox. With all of this in mind we're going to take a glance at the key hedge fund action encompassing Urban Edge Properties (NYSE:UE).
How have hedgies been trading Urban Edge Properties (NYSE:UE)?
At second quarter's end, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in UE over the last 20 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Carlson Capital held the most valuable stake in Urban Edge Properties (NYSE:UE), which was worth $18.7 million at the end of the third quarter. On the second spot was Lakewood Capital Management which amassed $14.3 million worth of shares. Waterfront Capital Partners, D E Shaw, and Renaissance Technologies 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 Hill Winds Capital allocated the biggest weight to Urban Edge Properties (NYSE:UE), around 2.39% of its 13F portfolio. Waterfront Capital Partners is also relatively very bullish on the stock, designating 2.06 percent of its 13F equity portfolio to UE.
As aggregate interest increased, key hedge funds have been driving this bullishness. Lakewood Capital Management, managed by Anthony Bozza, established the most valuable position in Urban Edge Properties (NYSE:UE). Lakewood Capital Management had $14.3 million invested in the company at the end of the quarter. Eduardo Abush's Waterfront Capital Partners also initiated a $12.5 million position during the quarter. The following funds were also among the new UE investors: Cliff Asness's AQR Capital Management, Matthew Crandall Gilman's Hill Winds Capital, and Charles Davidson and Joseph Jacobs's Wexford Capital.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Urban Edge Properties (NYSE:UE) but similarly valued. We will take a look at Grupo Financiero Galicia S.A. (NASDAQ:GGAL), Two Harbors Investment Corp (NYSE:TWO), Skyline Champion Corporation (NYSE:SKY), Methanex Corporation (NASDAQ:MEOH), GreenTree Hospitality Group Ltd. (NYSE:GHG), James River Group Holdings Ltd (NASDAQ:JRVR), and Tricida, Inc. (NASDAQ:TCDA). This group of stocks' market valuations are closest to UE's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position GGAL,11,32517,5 TWO,16,44443,-8 SKY,23,206283,0 MEOH,17,74700,5 GHG,5,24114,1 JRVR,10,105797,-3 TCDA,24,506231,0 Average,15.1,142012,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $105 million in UE's case. Tricida, Inc. (NASDAQ:TCDA) is the most popular stock in this table. On the other hand GreenTree Hospitality Group Ltd. (NYSE:GHG) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Urban Edge Properties (NYSE:UE) is more popular among hedge funds. Our overall hedge fund sentiment score for UE is 89. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. 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 21.3% in 2020 through September 25th and still beat the market by 17.7 percentage points. Unfortunately UE wasn't nearly as popular as these 10 stocks and hedge funds that were betting on UE were disappointed as the stock returned -19.1% since the end of 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.
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Disclosure: None. This article was originally published at Insider Monkey.