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Is UNVR Stock A Buy or Sell?

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Asma UL Husna
·6 min read
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In this article you are going to find out whether hedge funds think Univar Solutions Inc (NYSE:UNVR) 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.

Is UNVR stock a buy? The best stock pickers were betting on the stock. The number of bullish hedge fund bets went up by 1 recently. Univar Solutions Inc (NYSE:UNVR) was in 31 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 43. Our calculations also showed that UNVR isn't among the 30 most popular stocks among hedge funds (click for Q4 rankings). There were 30 hedge funds in our database with UNVR holdings at the end of September.

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 monthly stock picks returned 197% since March 2017 and outperformed the S&P 500 ETFs by more than 124 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Ken Griffin CITADEL INVESTMENT GROUP
Ken Griffin CITADEL INVESTMENT GROUP

Ken Griffin of Citadel Investment Group

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we heard that billionaire Peter Thiel is backing this biotech stock. So, we are taking a closer look at this space. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. With all of this in mind let's go over the fresh hedge fund action encompassing Univar Solutions Inc (NYSE:UNVR).

Do Hedge Funds Think UNVR Is A Good Stock To Buy Now?

At Q4's end, a total of 31 of the hedge funds tracked by Insider Monkey were long this stock, a change of 3% from the third quarter of 2020. On the other hand, there were a total of 43 hedge funds with a bullish position in UNVR a year ago. With hedge funds' sentiment swirling, there exists a select group of notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

The largest stake in Univar Solutions Inc (NYSE:UNVR) was held by Lyrical Asset Management, which reported holding $132.3 million worth of stock at the end of December. It was followed by First Pacific Advisors LLC with a $131.4 million position. Other investors bullish on the company included Iridian Asset Management, FPR Partners, and Paradice Investment Management. In terms of the portfolio weights assigned to each position Atlantic Investment Management allocated the biggest weight to Univar Solutions Inc (NYSE:UNVR), around 11.51% of its 13F portfolio. Bayberry Capital Partners is also relatively very bullish on the stock, setting aside 3.91 percent of its 13F equity portfolio to UNVR.

Now, key money managers have jumped into Univar Solutions Inc (NYSE:UNVR) headfirst. D E Shaw, managed by D. E. Shaw, assembled the most outsized position in Univar Solutions Inc (NYSE:UNVR). D E Shaw had $14.9 million invested in the company at the end of the quarter. Dmitry Balyasny's Balyasny Asset Management also initiated a $14.8 million position during the quarter. The other funds with brand new UNVR positions are Israel Englander's Millennium Management, Peter Galgay's Amitell Capital, and Ken Griffin's Citadel Investment Group.

Let's also examine hedge fund activity in other stocks - not necessarily in the same industry as Univar Solutions Inc (NYSE:UNVR) but similarly valued. These stocks are Pactiv Evergreen Inc. (NASDAQ:PTVE), BankUnited Inc (NYSE:BKU), AMN Healthcare Services Inc (NYSE:AMN), CONMED Corporation (NYSE:CNMD), ALX Oncology Holdings Inc. (NASDAQ:ALXO), Franklin Electric Co., Inc. (NASDAQ:FELE), and Vonage Holdings Corp. (NASDAQ:VG). This group of stocks' market values are similar to UNVR's market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PTVE,7,118932,-8 BKU,11,121421,-3 AMN,13,32646,-3 CNMD,28,242536,-5 ALXO,15,901879,6 FELE,17,231653,-2 VG,37,509857,1 Average,18.3,308418,-2 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $308 million. That figure was $713 million in UNVR's case. Vonage Holdings Corp. (NASDAQ:VG) is the most popular stock in this table. On the other hand Pactiv Evergreen Inc. (NASDAQ:PTVE) is the least popular one with only 7 bullish hedge fund positions. Univar Solutions Inc (NYSE:UNVR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UNVR is 67.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 12.2% in 2021 through April 12th and still beat the market by 1.5 percentage points. Hedge funds were also right about betting on UNVR as the stock returned 20.4% since the end of Q4 (through 4/12) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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Disclosure: None. This article was originally published at Insider Monkey.

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