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We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds' and investors' portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Unifi, Inc. (NYSE:UFI) based on that data.
Hedge fund interest in Unifi, Inc. (NYSE:UFI) shares was flat at the end of last quarter. This is usually a negative indicator. 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 Aesthetic Medical International Holdings Group Ltd. (NASDAQ:AIH), Nam Tai Property Inc (NYSE:NTP), and Veru Inc. (NASDAQ:VERU) to gather more data points. Our calculations also showed that UFI 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
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Jeffrey Ubben of ValueAct CapitalJeffrey Ubben[/caption]
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, blockchain technology's influence will go beyond online payments. So, we are checking out this futurist's moonshot opportunities in tech stocks. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we're going to take a glance at the key hedge fund action encompassing Unifi, Inc. (NYSE:UFI).
How are hedge funds trading Unifi, Inc. (NYSE:UFI)?
At the end of the first quarter, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 0% from the fourth quarter of 2019. By comparison, 11 hedge funds held shares or bullish call options in UFI a year ago. With hedge funds' capital changing hands, there exists an "upper tier" of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
Among these funds, Impala Asset Management held the most valuable stake in Unifi, Inc. (NYSE:UFI), which was worth $18.9 million at the end of the third quarter. On the second spot was ValueAct Capital which amassed $16.4 million worth of shares. Royce & Associates, Millennium 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 Impala Asset Management allocated the biggest weight to Unifi, Inc. (NYSE:UFI), around 2.55% of its 13F portfolio. Invenomic Capital Management is also relatively very bullish on the stock, setting aside 0.39 percent of its 13F equity portfolio to UFI.
Seeing as Unifi, Inc. (NYSE:UFI) has experienced falling interest from the entirety of the hedge funds we track, it's easy to see that there is a sect of funds that elected to cut their full holdings last quarter. At the top of the heap, George McCabe's Portolan Capital Management cut the biggest stake of the "upper crust" of funds monitored by Insider Monkey, worth about $3.6 million in stock, and Donald Sussman's Paloma Partners was right behind this move, as the fund dropped about $0.3 million worth. These moves are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's go over hedge fund activity in other stocks - not necessarily in the same industry as Unifi, Inc. (NYSE:UFI) but similarly valued. We will take a look at Aesthetic Medical International Holdings Group Ltd. (NASDAQ:AIH), Nam Tai Property Inc (NYSE:NTP), Veru Inc. (NASDAQ:VERU), and New Senior Investment Group Inc (NYSE:SNR). This group of stocks' market caps are similar to UFI's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AIH,1,525,1 NTP,6,38517,-2 VERU,8,12593,1 SNR,10,33204,-5 Average,6.25,21210,-1.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.25 hedge funds with bullish positions and the average amount invested in these stocks was $21 million. That figure was $47 million in UFI's case. New Senior Investment Group Inc (NYSE:SNR) is the most popular stock in this table. On the other hand Aesthetic Medical International Holdings Group Ltd. (NASDAQ:AIH) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Unifi, Inc. (NYSE:UFI) is more popular among hedge funds. 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 13.3% in 2020 through June 25th and still beat the market by 16.8 percentage points. Unfortunately UFI wasn't nearly as popular as these 10 stocks and hedge funds that were betting on UFI were disappointed as the stock returned 1.7% during the second quarter (through June 25th) 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.
Disclosure: None. This article was originally published at Insider Monkey.