Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by more than 10 percentage points since the end of the third quarter of 2018 as investors first worried over the possible ramifications of rising interest rates and the escalation of the trade war with China. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only about 60% S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of Umpqua Holdings Corporation (NASDAQ:UMPQ) and see how the stock is affected by the recent hedge fund activity.
Hedge fund interest in Umpqua Holdings Corporation (NASDAQ:UMPQ) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare UMPQ to other stocks including Q2 Holdings Inc (NYSE:QTWO), Evercore Inc. (NYSE:EVR), and Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) to get a better sense of its popularity. Our calculations also showed that UMPQ isn't among the 30 most popular stocks among hedge funds (view the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
To the average investor there are numerous formulas market participants can use to evaluate their holdings. Some of the most useful formulas are hedge fund and insider trading signals. Our experts have shown that, historically, those who follow the top picks of the elite money managers can outclass the broader indices by a very impressive amount (see the details here).
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let's take a look at the latest hedge fund action regarding Umpqua Holdings Corporation (NASDAQ:UMPQ).
Hedge fund activity in Umpqua Holdings Corporation (NASDAQ:UMPQ)
At Q2's end, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in UMPQ a year ago. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Umpqua Holdings Corporation (NASDAQ:UMPQ) was held by Fisher Asset Management, which reported holding $55.4 million worth of stock at the end of March. It was followed by Two Sigma Advisors with a $26.1 million position. Other investors bullish on the company included Balyasny Asset Management, Renaissance Technologies, and EJF Capital.
Since Umpqua Holdings Corporation (NASDAQ:UMPQ) has witnessed bearish sentiment from the smart money, it's easy to see that there was a specific group of hedgies that slashed their entire stakes in the second quarter. At the top of the heap, Noam Gottesman's GLG Partners cut the largest stake of the "upper crust" of funds tracked by Insider Monkey, comprising close to $3.2 million in stock, and Andrew Feldstein and Stephen Siderow's Blue Mountain Capital was right behind this move, as the fund sold off about $3.1 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Umpqua Holdings Corporation (NASDAQ:UMPQ) but similarly valued. These stocks are Q2 Holdings Inc (NYSE:QTWO), Evercore Inc. (NYSE:EVR), Aerojet Rocketdyne Holdings Inc (NYSE:AJRD), and United Therapeutics Corporation (NASDAQ:UTHR). This group of stocks' market values match UMPQ's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position QTWO,21,113950,6 EVR,26,483070,1 AJRD,18,452430,3 UTHR,30,1010985,9 Average,23.75,515109,4.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $515 million. That figure was $212 million in UMPQ's case. United Therapeutics Corporation (NASDAQ:UTHR) is the most popular stock in this table. On the other hand Aerojet Rocketdyne Holdings Inc (NYSE:AJRD) is the least popular one with only 18 bullish hedge fund positions. Umpqua Holdings Corporation (NASDAQ:UMPQ) 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 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately UMPQ wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UMPQ investors were disappointed as the stock returned 0.5% during the third quarter 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 many of these stocks already outperformed the market so far in 2019.
Disclosure: None. This article was originally published at Insider Monkey.