At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
Univest Corp. of PA (NASDAQ:UVSP) shares haven't seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 9 hedge funds' portfolios at the end of the second quarter of 2019. At the end of this article we will also compare UVSP to other stocks including SP Plus Corp (NASDAQ:SP), C&J Energy Services, Inc (NYSE:CJ), and Mallinckrodt Public Limited Company (NYSE:MNK) to get a better sense of its popularity. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 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.
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Let's check out the recent hedge fund action surrounding Univest Corp. of PA (NASDAQ:UVSP).
How are hedge funds trading Univest Corp. of PA (NASDAQ:UVSP)?
Heading into the third quarter of 2019, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from one quarter earlier. By comparison, 6 hedge funds held shares or bullish call options in UVSP a year ago. With hedgies' capital changing hands, there exists an "upper tier" of key hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Univest Corp. of PA (NASDAQ:UVSP), which was worth $29.5 million at the end of the second quarter. On the second spot was Impax Asset Management which amassed $3.1 million worth of shares. Moreover, Arrowstreet Capital, D E Shaw, and Two Sigma Advisors were also bullish on Univest Corp. of PA (NASDAQ:UVSP), allocating a large percentage of their portfolios to this stock.
Seeing as Univest Corp. of PA (NASDAQ:UVSP) has witnessed a decline in interest from the smart money, we can see that there exists a select few money managers that decided to sell off their entire stakes by the end of the second quarter. At the top of the heap, Paul Marshall and Ian Wace's Marshall Wace LLP dropped the largest investment of all the hedgies monitored by Insider Monkey, totaling about $0.5 million in stock. Paul Tudor Jones's fund, Tudor Investment Corp, also dumped its stock, about $0.2 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as Univest Corp. of PA (NASDAQ:UVSP) but similarly valued. These stocks are SP Plus Corp (NASDAQ:SP), C&J Energy Services, Inc (NYSE:CJ), Mallinckrodt Public Limited Company (NYSE:MNK), and Omega Flex, Inc. (NASDAQ:OFLX). This group of stocks' market caps are closest to UVSP's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SP,13,96170,-1 CJ,21,154618,-4 MNK,20,152724,0 OFLX,3,9894,-1 Average,14.25,103352,-1.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $103 million. That figure was $42 million in UVSP's case. C&J Energy Services, Inc (NYSE:CJ) is the most popular stock in this table. On the other hand Omega Flex, Inc. (NASDAQ:OFLX) is the least popular one with only 3 bullish hedge fund positions. Univest Corp. of PA (NASDAQ:UVSP) 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 UVSP wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UVSP investors were disappointed as the stock returned -2.1% 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.