Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors' money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
United Therapeutics Corporation (NASDAQ:UTHR) investors should be aware of an increase in support from the world's most elite money managers in recent months. UTHR was in 23 hedge funds' portfolios at the end of December. There were 18 hedge funds in our database with UTHR positions at the end of the previous quarter. Our calculations also showed that UTHR isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? 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 32 percentage points since May 2014 through March 12, 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 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We're going to analyze the new hedge fund action encompassing United Therapeutics Corporation (NASDAQ:UTHR).
What does the smart money think about United Therapeutics Corporation (NASDAQ:UTHR)?
Heading into the first quarter of 2019, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 28% from the second quarter of 2018. On the other hand, there were a total of 20 hedge funds with a bullish position in UTHR 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.
Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the most valuable position in United Therapeutics Corporation (NASDAQ:UTHR). AQR Capital Management has a $273.8 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Renaissance Technologies, led by Jim Simons, holding a $239.2 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions include William Leland Edwards's Palo Alto Investors, Mitchell Blutt's Consonance Capital Management and D. E. Shaw's D E Shaw.
Now, key hedge funds have jumped into United Therapeutics Corporation (NASDAQ:UTHR) headfirst. Point72 Asset Management, managed by Steve Cohen, assembled the largest position in United Therapeutics Corporation (NASDAQ:UTHR). Point72 Asset Management had $14.6 million invested in the company at the end of the quarter. Michael Castor's Sio Capital also initiated a $3.3 million position during the quarter. The other funds with new positions in the stock are Peter Rathjens, Bruce Clarke and John Campbell's Arrowstreet Capital, Paul Marshall and Ian Wace's Marshall Wace LLP, and Hoon Kim's Quantinno Capital.
Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as United Therapeutics Corporation (NASDAQ:UTHR) but similarly valued. These stocks are Popular Inc (NASDAQ:BPOP), Polaris Industries Inc. (NYSE:PII), Xerox Corporation (NYSE:XRX), and ICU Medical, Inc. (NASDAQ:ICUI). All of these stocks' market caps match UTHR's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position BPOP,32,804171,4 PII,15,113485,-2 XRX,44,888811,7 ICUI,20,327916,-15 Average,27.75,533596,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $534 million. That figure was $972 million in UTHR's case. Xerox Corporation (NYSE:XRX) is the most popular stock in this table. On the other hand Polaris Industries Inc. (NYSE:PII) is the least popular one with only 15 bullish hedge fund positions. United Therapeutics Corporation (NASDAQ:UTHR) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately UTHR wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); UTHR investors were disappointed as the stock returned -9.2% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.