The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30th. We at Insider Monkey have made an extensive database of nearly 750 of those established hedge funds and famous value investors' filings. In this article, we analyze how these elite funds and prominent investors traded Unum Group (NYSE:UNM) based on those filings.
Unum Group (NYSE:UNM) was in 23 hedge funds' portfolios at the end of September. UNM investors should pay attention to a decrease in activity from the world's largest hedge funds recently. There were 25 hedge funds in our database with UNM positions at the end of the previous quarter. Our calculations also showed that UNM isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_758442" align="aligncenter" width="450"] Michael Platt of BlueCrest Capital Mgmt.[/caption]
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world's most bearish hedge fund that's more convinced than ever that a crash is coming, our long-short investment strategy doesn't rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds' buy/sell signals. We're going to take a glance at the fresh hedge fund action regarding Unum Group (NYSE:UNM).
What does smart money think about Unum Group (NYSE:UNM)?
At the end of the third quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from the previous quarter. By comparison, 25 hedge funds held shares or bullish call options in UNM 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 Unum Group (NYSE:UNM) was held by Arrowstreet Capital, which reported holding $110.2 million worth of stock at the end of September. It was followed by AQR Capital Management with a $109.4 million position. Other investors bullish on the company included D E Shaw, GLG Partners, and Two Sigma Advisors. In terms of the portfolio weights assigned to each position Quantinno Capital allocated the biggest weight to Unum Group (NYSE:UNM), around 0.4% of its 13F portfolio. Arrowstreet Capital is also relatively very bullish on the stock, designating 0.26 percent of its 13F equity portfolio to UNM.
Since Unum Group (NYSE:UNM) has experienced bearish sentiment from the smart money, logic holds that there lies a certain "tier" of funds that decided to sell off their positions entirely last quarter. Intriguingly, Michel Massoud's Melqart Asset Management cut the biggest investment of the 750 funds followed by Insider Monkey, worth close to $33.3 million in stock. Dmitry Balyasny's fund, Balyasny Asset Management, also sold off its stock, about $1.8 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 2 funds last quarter.
Let's now take a look at hedge fund activity in other stocks similar to Unum Group (NYSE:UNM). These stocks are Knight-Swift Transportation Holdings Inc. (NYSE:KNX), Zillow Group Inc (NASDAQ:Z), Flowserve Corporation (NYSE:FLS), and Sabre Corporation (NASDAQ:SABR). All of these stocks' market caps resemble UNM's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position KNX,22,303434,-1 Z,38,879845,-13 FLS,19,225613,-7 SABR,25,224467,13 Average,26,408340,-2 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $408 million. That figure was $474 million in UNM's case. Zillow Group Inc (NASDAQ:Z) is the most popular stock in this table. On the other hand Flowserve Corporation (NYSE:FLS) is the least popular one with only 19 bullish hedge fund positions. Unum Group (NYSE:UNM) 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 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately UNM wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UNM investors were disappointed as the stock returned 4.5% during the first two months of the fourth 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.