Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds' and successful investors' positions as of the end of the second quarter. You can find articles about an individual hedge fund's trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of Ubiquiti Inc. (NYSE:UI) based on that data and determine whether they were really smart about the stock.
Ubiquiti Inc. (NYSE:UI) shareholders have witnessed an increase in hedge fund sentiment in recent months. Ubiquiti Inc. (NYSE:UI) was in 29 hedge funds' portfolios at the end of the second quarter of 2020. The all time high for this statistics is 25. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that UI 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). 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.
Bruce Kovner of Caxton Associates LP
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, this “mom” trader turned $2000 into $2 million within 2 years. So, we are checking out her best trade idea of the month. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. 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. Keeping this in mind we're going to take a look at the fresh hedge fund action regarding Ubiquiti Inc. (NYSE:UI).
What have hedge funds been doing with Ubiquiti Inc. (NYSE:UI)?
At Q2's end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of 26% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UI over the last 20 quarters. With hedge funds' capital changing hands, there exists an "upper tier" of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Ubiquiti Inc. (NYSE:UI), which was worth $132.2 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $27.1 million worth of shares. D E Shaw, Harspring Capital Management, and Citadel Investment Group 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 Harspring Capital Management allocated the biggest weight to Ubiquiti Inc. (NYSE:UI), around 6.14% of its 13F portfolio. Old Well Partners is also relatively very bullish on the stock, setting aside 1.25 percent of its 13F equity portfolio to UI.
As aggregate interest increased, key hedge funds have been driving this bullishness. Bridgewater Associates, managed by Ray Dalio, established the most outsized position in Ubiquiti Inc. (NYSE:UI). Bridgewater Associates had $1.4 million invested in the company at the end of the quarter. Bruce Kovner's Caxton Associates LP also initiated a $1.1 million position during the quarter. The following funds were also among the new UI investors: Greg Poole's Echo Street Capital Management, Donald Sussman's Paloma Partners, and Peter Muller's PDT Partners.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Ubiquiti Inc. (NYSE:UI) but similarly valued. These stocks are SVB Financial Group (NASDAQ:SIVB), Jacobs Engineering Group Inc. (NYSE:J), UDR, Inc. (NYSE:UDR), CenturyLink, Inc. (NYSE:CTL), E*TRADE Financial Corporation (NASDAQ:ETFC), Wabtec Corporation (NYSE:WAB), and Logitech International SA (NASDAQ:LOGI). All of these stocks' market caps are similar to UI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SIVB,26,456322,-4 J,32,1047013,4 UDR,29,389036,10 CTL,30,788387,-4 ETFC,36,1370357,-1 WAB,39,1528246,-2 LOGI,13,277342,-2 Average,29.3,836672,0.1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 29.3 hedge funds with bullish positions and the average amount invested in these stocks was $837 million. That figure was $228 million in UI's case. Wabtec Corporation (NYSE:WAB) is the most popular stock in this table. On the other hand Logitech International SA (NASDAQ:LOGI) is the least popular one with only 13 bullish hedge fund positions. Ubiquiti Inc. (NYSE:UI) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UI is 70.8. 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. 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 23.8% in 2020 through September 14th and surpassed the market by 17.6 percentage points. Unfortunately UI wasn't nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); UI investors were disappointed as the stock returned -12.6% since Q2 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.
Get real-time email alerts: Follow Ubiquiti Inc. (NYSE:UI)
Disclosure: None. This article was originally published at Insider Monkey.