Insider Monkey has processed numerous 13F filings of hedge funds and successful 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 first quarter. You can find write-ups 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 and analyze what the smart money thinks of United Fire Group, Inc. (NASDAQ:UFCS) based on that data.
Is United Fire Group, Inc. (NASDAQ:UFCS) ready to rally soon? Hedge funds are becoming less hopeful. The number of long hedge fund positions were cut by 1 recently. Our calculations also showed that UFCS isn't among the 30 most popular stocks among hedge funds.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let's take a peek at the latest hedge fund action surrounding United Fire Group, Inc. (NASDAQ:UFCS).
How are hedge funds trading United Fire Group, Inc. (NASDAQ:UFCS)?
At Q1's end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards UFCS over the last 15 quarters. With hedgies' capital changing hands, there exists a few notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in United Fire Group, Inc. (NASDAQ:UFCS), which was worth $7.6 million at the end of the first quarter. On the second spot was AQR Capital Management which amassed $1.9 million worth of shares. Moreover, Prospector Partners, Millennium Management, and Winton Capital Management were also bullish on United Fire Group, Inc. (NASDAQ:UFCS), allocating a large percentage of their portfolios to this stock.
Judging by the fact that United Fire Group, Inc. (NASDAQ:UFCS) has faced declining sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of money managers that decided to sell off their entire stakes heading into Q3. At the top of the heap, Noam Gottesman's GLG Partners said goodbye to the largest investment of the "upper crust" of funds tracked by Insider Monkey, comprising close to $1 million in stock, and Brandon Haley's Holocene Advisors was right behind this move, as the fund dropped about $0.2 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest was cut by 1 funds heading into Q3.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as United Fire Group, Inc. (NASDAQ:UFCS) but similarly valued. We will take a look at Frontline Ltd (NYSE:FRO), Easterly Government Properties Inc (NYSE:DEA), Enterprise Financial Services Corp (NASDAQ:EFSC), and MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI). This group of stocks' market caps match UFCS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FRO,10,32390,4 DEA,6,78261,1 EFSC,15,52852,0 MTSI,16,134289,1 Average,11.75,74448,1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.75 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $15 million in UFCS's case. MACOM Technology Solutions Holdings, Inc. (NASDAQ:MTSI) is the most popular stock in this table. On the other hand Easterly Government Properties Inc (NYSE:DEA) is the least popular one with only 6 bullish hedge fund positions. United Fire Group, Inc. (NASDAQ:UFCS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. A small number of hedge funds were also right about betting on UFCS as the stock returned 11% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.