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Is Urban Edge Properties (NYSE:UE) a good investment right now? We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Hedge fund interest in Urban Edge Properties (NYSE:UE) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare UE to other stocks including PROS Holdings, Inc. (NYSE:PRO), AAON, Inc. (NASDAQ:AAON), and Fox Factory Holding Corp (NASDAQ:FOXF) 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.
Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. 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 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 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.
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Clint Carlson of Carlson Capital[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let's check out the key hedge fund action regarding Urban Edge Properties (NYSE:UE).
What does smart money think about Urban Edge Properties (NYSE:UE)?
At the end of the third quarter, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UE over the last 17 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Urban Edge Properties (NYSE:UE), which was worth $36.8 million at the end of the third quarter. On the second spot was Carlson Capital which amassed $27.7 million worth of shares. Two Sigma Advisors, Waterfront Capital Partners, and D E Shaw were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Waterfront Capital Partners allocated the biggest weight to Urban Edge Properties (NYSE:UE), around 0.85% of its 13F portfolio. Carlson Capital is also relatively very bullish on the stock, setting aside 0.5 percent of its 13F equity portfolio to UE.
Seeing as Urban Edge Properties (NYSE:UE) has witnessed bearish sentiment from the aggregate hedge fund industry, it's easy to see that there was a specific group of funds who sold off their full holdings last quarter. Interestingly, John Khoury's Long Pond Capital sold off the biggest stake of the 750 funds tracked by Insider Monkey, valued at an estimated $34.7 million in stock. Paul Tudor Jones's fund, Tudor Investment Corp, also sold off its stock, about $3.6 million worth. These transactions are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Let's check out hedge fund activity in other stocks similar to Urban Edge Properties (NYSE:UE). These stocks are PROS Holdings, Inc. (NYSE:PRO), AAON, Inc. (NASDAQ:AAON), Fox Factory Holding Corp (NASDAQ:FOXF), and PennyMac Financial Services Inc (NYSE:PFSI). All of these stocks' market caps resemble UE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position PRO,24,239879,8 AAON,6,4449,0 FOXF,12,21305,1 PFSI,15,105400,-1 Average,14.25,92758,2 [/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 $93 million. That figure was $94 million in UE's case. PROS Holdings, Inc. (NYSE:PRO) is the most popular stock in this table. On the other hand AAON, Inc. (NASDAQ:AAON) is the least popular one with only 6 bullish hedge fund positions. Urban Edge Properties (NYSE:UE) 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 UE wasn't nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UE investors were disappointed as the stock returned 4.7% 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.