Is Upland Software Inc (UPLD) Going To Burn These Hedge Funds ?
The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We have processed the filings of the more than 700 world-class investment firms that we track and now have access to the collective wisdom contained in these filings, which are based on their June 28 holdings, data that is available nowhere else. Should you consider Upland Software Inc (NASDAQ:UPLD) for your portfolio? We'll look to this invaluable collective wisdom for the answer.
Upland Software Inc (NASDAQ:UPLD) investors should be aware of a decrease in hedge fund sentiment lately. UPLD was in 24 hedge funds' portfolios at the end of the second quarter of 2019. There were 28 hedge funds in our database with UPLD positions at the end of the previous quarter. Our calculations also showed that UPLD isn't among the 30 most popular stocks among hedge funds (see the video below).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds' small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren't comfortable with shorting stocks, you should at least avoid initiating long positions in our short portfolio.
Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn't rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We're going to take a glance at the recent hedge fund action encompassing Upland Software Inc (NASDAQ:UPLD).
What have hedge funds been doing with Upland Software Inc (NASDAQ:UPLD)?
Heading into the third quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. On the other hand, there were a total of 21 hedge funds with a bullish position in UPLD a year ago. So, let's examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Portolan Capital Management held the most valuable stake in Upland Software Inc (NASDAQ:UPLD), which was worth $46 million at the end of the second quarter. On the second spot was Dorset Management which amassed $19.9 million worth of shares. Moreover, Driehaus Capital, Tiger Eye Capital, and Ardsley Partners were also bullish on Upland Software Inc (NASDAQ:UPLD), allocating a large percentage of their portfolios to this stock.
Since Upland Software Inc (NASDAQ:UPLD) has experienced declining sentiment from hedge fund managers, logic holds that there is a sect of money managers who were dropping their entire stakes in the second quarter. At the top of the heap, Sander Gerber's Hudson Bay Capital Management sold off the biggest position of the "upper crust" of funds tracked by Insider Monkey, comprising about $5.5 million in stock, and Paul Marshall and Ian Wace's Marshall Wace LLP was right behind this move, as the fund dumped about $1.4 million worth. These transactions are interesting, as total hedge fund interest fell by 4 funds in the second quarter.
Let's now take a look at hedge fund activity in other stocks - not necessarily in the same industry as Upland Software Inc (NASDAQ:UPLD) but similarly valued. We will take a look at Marten Transport, Ltd (NASDAQ:MRTN), GasLog Partners LP (NYSE:GLOP), Vocera Communications Inc (NYSE:VCRA), and Boot Barn Holdings Inc (NYSE:BOOT). This group of stocks' market valuations are closest to UPLD's market valuation.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position MRTN,18,43749,1 GLOP,5,17752,1 VCRA,14,52283,-3 BOOT,22,185590,-1 Average,14.75,74844,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.75 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $202 million in UPLD's case. Boot Barn Holdings Inc (NYSE:BOOT) is the most popular stock in this table. On the other hand GasLog Partners LP (NYSE:GLOP) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Upland Software Inc (NASDAQ:UPLD) is more popular among hedge funds. 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 UPLD wasn't nearly as popular as these 20 stocks and hedge funds that were betting on UPLD were disappointed as the stock returned -23.4% 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 in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
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