The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on March 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and famous investors' filings. In this article, we analyze how these elite funds and prominent investors traded United Microelectronics Corp (NYSE:UMC) based on those filings.
United Microelectronics Corp (NYSE:UMC) has experienced a decrease in enthusiasm from smart money lately. Our calculations also showed that UMC 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.
[caption id="attachment_758446" align="aligncenter" width="450"] Michael Hintze of CQS Capital[/caption]
We're going to take a look at the recent hedge fund action encompassing United Microelectronics Corp (NYSE:UMC).
How have hedgies been trading United Microelectronics Corp (NYSE:UMC)?
At Q1's end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -12% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards UMC over the last 15 quarters. With the smart money's sentiment swirling, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly (or already accumulated large positions).
Among these funds, LMR Partners held the most valuable stake in United Microelectronics Corp (NYSE:UMC), which was worth $33.7 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $30.2 million worth of shares. Moreover, Arrowstreet Capital, CQS Cayman LP, and OZ Management were also bullish on United Microelectronics Corp (NYSE:UMC), allocating a large percentage of their portfolios to this stock.
Judging by the fact that United Microelectronics Corp (NYSE:UMC) has faced falling interest from the aggregate hedge fund industry, we can see that there lies a certain "tier" of funds who sold off their entire stakes last quarter. Intriguingly, Jeffrey Talpins's Element Capital Management said goodbye to the biggest stake of the 700 funds followed by Insider Monkey, totaling about $0.3 million in stock, and David Costen Haley's HBK Investments was right behind this move, as the fund dumped about $0.1 million worth. These moves are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Let's also examine hedge fund activity in other stocks similar to United Microelectronics Corp (NYSE:UMC). These stocks are First Industrial Realty Trust, Inc. (NYSE:FR), Haemonetics Corporation (NYSE:HAE), Texas Roadhouse Inc (NASDAQ:TXRH), and Black Hills Corporation (NYSE:BKH). This group of stocks' market valuations match UMC's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position FR,11,303801,-7 HAE,24,648117,4 TXRH,25,267058,6 BKH,18,136002,1 Average,19.5,338745,1 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $339 million. That figure was $87 million in UMC's case. Texas Roadhouse Inc (NASDAQ:TXRH) is the most popular stock in this table. On the other hand First Industrial Realty Trust, Inc. (NYSE:FR) is the least popular one with only 11 bullish hedge fund positions. United Microelectronics Corp (NYSE:UMC) 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 UMC as the stock returned 13.3% during the same time frame and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.