In this article you are going to find out whether hedge funds think Unisys Corporation (NYSE:UIS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It's not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Unisys Corporation (NYSE:UIS) shareholders have witnessed a decrease in hedge fund interest lately. Our calculations also showed that UIS 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.
In the financial world there are numerous methods shareholders put to use to evaluate their holdings. Some of the best methods are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can trounce the market by a significant amount (see the details here).
[caption id="attachment_256989" align="aligncenter" width="392"] Dmitry Balyasny of Balyasny Asset Management[/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. Keeping this in mind let's take a gander at the new hedge fund action surrounding Unisys Corporation (NYSE:UIS).
What does smart money think about Unisys Corporation (NYSE:UIS)?
At Q1's end, a total of 16 of the hedge funds tracked by Insider Monkey were long this stock, a change of -11% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UIS over the last 18 quarters. With hedge funds' positions undergoing their usual ebb and flow, there exists an "upper tier" of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
The largest stake in Unisys Corporation (NYSE:UIS) was held by Royce & Associates, which reported holding $13 million worth of stock at the end of September. It was followed by Arrowstreet Capital with a $12.9 million position. Other investors bullish on the company included D E Shaw, Harvey Partners, and Rutabaga Capital Management. In terms of the portfolio weights assigned to each position Harvey Partners allocated the biggest weight to Unisys Corporation (NYSE:UIS), around 10.08% of its 13F portfolio. Rutabaga Capital Management is also relatively very bullish on the stock, setting aside 3.83 percent of its 13F equity portfolio to UIS.
Since Unisys Corporation (NYSE:UIS) has faced a decline in interest from the smart money, logic holds that there exists a select few fund managers who sold off their full holdings last quarter. Intriguingly, Noam Gottesman's GLG Partners sold off the largest investment of the 750 funds followed by Insider Monkey, comprising about $2.6 million in stock. Peter Algert and Kevin Coldiron's fund, Algert Coldiron Investors, also dropped its stock, about $0.4 million worth. These transactions are interesting, as total hedge fund interest dropped by 2 funds last quarter.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Unisys Corporation (NYSE:UIS) but similarly valued. We will take a look at Yunji Inc. (NASDAQ:YJ), Tactile Systems Technology, Inc. (NASDAQ:TCMD), Daqo New Energy Corp (NYSE:DQ), and Primoris Services Corp (NASDAQ:PRIM). This group of stocks' market caps are closest to UIS's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position YJ,4,3255,-2 TCMD,13,38706,1 DQ,15,43162,1 PRIM,11,33113,0 Average,10.75,29559,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.75 hedge funds with bullish positions and the average amount invested in these stocks was $30 million. That figure was $75 million in UIS's case. Daqo New Energy Corp (NYSE:DQ) is the most popular stock in this table. On the other hand Yunji Inc. (NASDAQ:YJ) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks Unisys Corporation (NYSE:UIS) 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 UIS wasn't nearly as popular as these 10 stocks and hedge funds that were betting on UIS were disappointed as the stock returned -12.7% 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.