Coronavirus is probably the #1 concern in investors' minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president.
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. The Insider Monkey team has completed processing the quarterly 13F filings for the December quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards UBS Group AG (NYSE:UBS).
UBS Group AG (NYSE:UBS) investors should be aware of a decrease in activity from the world's largest hedge funds in recent months. UBS was in 14 hedge funds' portfolios at the end of December. There were 16 hedge funds in our database with UBS positions at the end of the previous quarter. Our calculations also showed that UBS isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
If you'd ask most traders, hedge funds are assumed to be worthless, outdated investment tools of yesteryear. While there are greater than 8000 funds with their doors open today, Our experts hone in on the aristocrats of this club, about 850 funds. Most estimates calculate that this group of people watch over the majority of the hedge fund industry's total asset base, and by keeping an eye on their top picks, Insider Monkey has figured out numerous investment strategies that have historically outrun Mr. Market. Insider Monkey's flagship short hedge fund strategy exceeded the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_26335" align="aligncenter" width="400"] Ken Fisher of Fisher Asset Management[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. With all of this in mind let's take a peek at the fresh hedge fund action encompassing UBS Group AG (NYSE:UBS).
Hedge fund activity in UBS Group AG (NYSE:UBS)
At Q4's end, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from the previous quarter. On the other hand, there were a total of 11 hedge funds with a bullish position in UBS a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in UBS Group AG (NYSE:UBS) was held by Fisher Asset Management, which reported holding $659.8 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $137.9 million position. Other investors bullish on the company included GQG Partners, Pzena Investment Management, and Odey Asset Management Group. In terms of the portfolio weights assigned to each position Odey Asset Management Group allocated the biggest weight to UBS Group AG (NYSE:UBS), around 1.9% of its 13F portfolio. GQG Partners is also relatively very bullish on the stock, setting aside 0.82 percent of its 13F equity portfolio to UBS.
Judging by the fact that UBS Group AG (NYSE:UBS) has experienced falling interest from the entirety of the hedge funds we track, it's safe to say that there exists a select few hedgies who sold off their entire stakes heading into Q4. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP sold off the largest investment of all the hedgies watched by Insider Monkey, valued at close to $17.3 million in stock. Ben Levine, Andrew Manuel and Stefan Renold's fund, LMR Partners, also cut its stock, about $1.7 million worth. These transactions are important to note, as total hedge fund interest fell by 2 funds heading into Q4.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as UBS Group AG (NYSE:UBS) but similarly valued. We will take a look at Activision Blizzard, Inc. (NASDAQ:ATVI), Banco Santander (Brasil) SA (NYSE:BSBR), Moody's Corporation (NYSE:MCO), and American International Group Inc (NYSE:AIG). This group of stocks' market values are similar to UBS's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position ATVI,76,2811204,3 BSBR,8,91437,-7 MCO,49,9218123,-6 AIG,52,2870459,-1 Average,46.25,3747806,-2.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.25 hedge funds with bullish positions and the average amount invested in these stocks was $3748 million. That figure was $1045 million in UBS's case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 8 bullish hedge fund positions. UBS Group AG (NYSE:UBS) is not the least popular stock in this group but hedge fund interest is still below average. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but beat the market by 3.1 percentage points. Unfortunately UBS wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UBS investors were disappointed as the stock returned -24.6% during the same time period 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 most of these stocks already outperformed the market in Q1.
Disclosure: None. This article was originally published at Insider Monkey.