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Hedge Funds Are Selling First United Corp (FUNC)

Debasis Saha

In this article we will take a look at whether hedge funds think First United Corp (NASDAQ:FUNC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

First United Corp (NASDAQ:FUNC) was in 4 hedge funds' portfolios at the end of the first quarter of 2020. FUNC shareholders have witnessed a decrease in hedge fund sentiment recently. There were 8 hedge funds in our database with FUNC holdings at the end of the previous quarter. Our calculations also showed that FUNC 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.

According to most shareholders, hedge funds are viewed as underperforming, outdated investment vehicles of the past. While there are more than 8000 funds with their doors open at present, Our experts hone in on the aristocrats of this club, approximately 850 funds. These investment experts manage most of the smart money's total capital, and by shadowing their first-class equity investments, Insider Monkey has brought to light a number of investment strategies that have historically outstripped the market. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 36% since February 2017 (through May 18th) even though the market was up 30% during the same period. We just shared a list of 8 short targets in our latest quarterly update .

[caption id="attachment_27480" align="aligncenter" width="400"] Israel Englander of Millennium Management[/caption]

Izzy Englander of MILLENNIUM MANAGEMENT

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020's unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. 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 let's go over the key hedge fund action surrounding First United Corp (NASDAQ:FUNC).

Hedge fund activity in First United Corp (NASDAQ:FUNC)

At Q1's end, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -50% from the fourth quarter of 2019. On the other hand, there were a total of 3 hedge funds with a bullish position in FUNC a year ago. With hedge funds' positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).

Is FUNC A Good Stock To Buy?

According to Insider Monkey's hedge fund database, Jeffrey Gendell's Tontine Asset Management has the most valuable position in First United Corp (NASDAQ:FUNC), worth close to $2.5 million, accounting for 0.8% of its total 13F portfolio. The second most bullish fund manager is Renaissance Technologies, with a $1.6 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism encompass Israel Englander's Millennium Management, Lawrence Seidman's Seidman Investment Partnership and . In terms of the portfolio weights assigned to each position Tontine Asset Management allocated the biggest weight to First United Corp (NASDAQ:FUNC), around 0.77% of its 13F portfolio. Seidman Investment Partnership is also relatively very bullish on the stock, earmarking 0.7 percent of its 13F equity portfolio to FUNC.

Judging by the fact that First United Corp (NASDAQ:FUNC) has experienced a decline in interest from the aggregate hedge fund industry, it's easy to see that there were a few fund managers that decided to sell off their full holdings by the end of the third quarter. At the top of the heap, Phil Stone's Fourthstone LLC sold off the biggest position of the "upper crust" of funds monitored by Insider Monkey, totaling close to $1.7 million in stock, and Michael Gelband's ExodusPoint Capital was right behind this move, as the fund said goodbye to about $0.5 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 4 funds by the end of the third quarter.

Let's now take a look at hedge fund activity in other stocks similar to First United Corp (NASDAQ:FUNC). We will take a look at Ramaco Resources, Inc. (NASDAQ:METC), Harrow Health, Inc. (NASDAQ:HROW), Millendo Therapeutics, Inc. (NASDAQ:MLND), and Palatin Technologies, Inc. (NYSE:PTN). This group of stocks' market caps are closest to FUNC's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position METC,7,2222,1 HROW,13,21342,-2 MLND,13,35175,2 PTN,5,1040,-2 Average,9.5,14945,-0.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.5 hedge funds with bullish positions and the average amount invested in these stocks was $15 million. That figure was $6 million in FUNC's case. Harrow Health, Inc. (NASDAQ:HROW) is the most popular stock in this table. On the other hand Palatin Technologies, Inc. (NYSE:PTN) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks First United Corp (NASDAQ:FUNC) is even less popular than PTN. Hedge funds dodged a bullet by taking a bearish stance towards FUNC. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately FUNC wasn't nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); FUNC investors were disappointed as the stock returned -2.8% during the second quarter (through the end of May) 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 so far in 2020.

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

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