World-class money managers like Ken Griffin and Barry Rosenstein only invest their wealthy clients' money after undertaking a rigorous examination of any potential stock. They are particularly successful in this regard when it comes to small-cap stocks, which their peerless research gives them a big information advantage on when it comes to judging their worth. It's not surprising then that they generate their biggest returns from these stocks and invest more of their money in these stocks on average than other investors. It's also not surprising then that we pay close attention to these picks ourselves and have built a market-beating investment strategy around them.
Unilever plc (NYSE:UL) was in 14 hedge funds' portfolios at the end of the third quarter of 2018. UL investors should pay attention to an increase in hedge fund interest of late. There were 13 hedge funds in our database with UL positions at the end of the previous quarter. Our calculations also showed that UL isn't among the 30 most popular stocks among hedge funds.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey's flagship best performing hedge funds strategy returned 6.3% year to date (through December 3rd) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 18 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's analyze the fresh hedge fund action regarding Unilever plc (NYSE:UL).
Hedge fund activity in Unilever plc (NYSE:UL)
Heading into the fourth quarter of 2018, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UL over the last 13 quarters. With the smart money's capital changing hands, there exists a select group of notable hedge fund managers who were adding to their stakes meaningfully (or already accumulated large positions).
More specifically, Markel Gayner Asset Management was the largest shareholder of Unilever plc (NYSE:UL), with a stake worth $84 million reported as of the end of September. Trailing Markel Gayner Asset Management was Arrowstreet Capital, which amassed a stake valued at $28.5 million. Renaissance Technologies, Wallace Capital Management, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
With a general bullishness amongst the heavyweights, key hedge funds have been driving this bullishness. Citadel Investment Group, managed by Ken Griffin, created the biggest position in Unilever plc (NYSE:UL). Citadel Investment Group had $1.4 million invested in the company at the end of the quarter. Sander Gerber's Hudson Bay Capital Management also made a $0.8 million investment in the stock during the quarter. The only other fund with a brand new UL position is Ken Fisher's Fisher Asset Management.
Let's now take a look at hedge fund activity in other stocks similar to Unilever plc (NYSE:UL). These stocks are Unilever N.V. (NYSE:UN), DowDuPont Inc. (NYSE:DWDP), AbbVie Inc (NYSE:ABBV), and International Business Machines Corp. (NYSE:IBM). This group of stocks' market values match UL's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UN,14,1117559,0 DWDP,69,4551261,-6 ABBV,40,3740625,-6 IBM,43,1535227,-3 Average,41.5,2736168,-3.75 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 41.5 hedge funds with bullish positions and the average amount invested in these stocks was $2.74 billion. That figure was $137 million in UL's case. DowDuPont Inc. (NYSE:DWDP) is the most popular stock in this table. On the other hand Unilever N.V. (NYSE:UN) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks Unilever plc (NYSE:UL) is even less popular than UN. Considering that hedge funds aren't fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn't behind this stock. This isn't necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None. This article was originally published at Insider Monkey.