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Were Hedge Funds Right About Piling Into Uber Technologies, Inc. (UBER)?

Debasis Saha
·5 min read
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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. Insider Monkey finished processing 887 13F filings submitted by hedge funds and prominent investors. These filings show these funds' portfolio positions as of December 31st, 2020. What do these smart investors think about Uber Technologies, Inc. (NYSE:UBER)?

Uber Technologies, Inc. (NYSE:UBER) has experienced an increase in activity from the world's largest hedge funds in recent months. Uber Technologies, Inc. (NYSE:UBER) was in 135 hedge funds' portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 100. This means the bullish number of hedge fund positions in this stock reached a brand new all time high. Our calculations also showed that UBER ranked #12 among the 30 most popular stocks among hedge funds (click for Q4 rankings).

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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (see the details here).

Scott Ferguson Sachem Head Capital
Scott Ferguson Sachem Head Capital

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. 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. Now let's review the new hedge fund action surrounding Uber Technologies, Inc. (NYSE:UBER).

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

At the end of the fourth quarter, a total of 135 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from one quarter earlier. By comparison, 94 hedge funds held shares or bullish call options in UBER a year ago. So, let's check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is UBER A Good Stock To Buy?
Is UBER A Good Stock To Buy?

Among these funds, Altimeter Capital Management held the most valuable stake in Uber Technologies, Inc. (NYSE:UBER), which was worth $1449 million at the end of the fourth quarter. On the second spot was Tiger Global Management LLC which amassed $1411.8 million worth of shares. Coatue Management, Hillhouse Capital Management, and Citadel Investment Group 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 Tao Capital allocated the biggest weight to Uber Technologies, Inc. (NYSE:UBER), around 26.37% of its 13F portfolio. Marathon Partners is also relatively very bullish on the stock, earmarking 19.04 percent of its 13F equity portfolio to UBER.

As aggregate interest increased, key money managers were breaking ground themselves. Whale Rock Capital Management, managed by Alex Sacerdote, assembled the most outsized position in Uber Technologies, Inc. (NYSE:UBER). Whale Rock Capital Management had $341.5 million invested in the company at the end of the quarter. Steve Cohen's Point72 Asset Management also initiated a $201 million position during the quarter. The other funds with brand new UBER positions are Brandon Haley's Holocene Advisors, Ryan Frick and Oliver Evans's Dorsal Capital Management, and Robert Boucai's Newbrook Capital Advisors.

Let's check out hedge fund activity in other stocks similar to Uber Technologies, Inc. (NYSE:UBER). We will take a look at CVS Health Corporation (NYSE:CVS), Target Corporation (NYSE:TGT), Fidelity National Information Services Inc. (NYSE:FIS), Airbnb, Inc. (NASDAQ:ABNB), British American Tobacco plc (NYSE:BTI), Vale SA (NYSE:VALE), and Deere & Company (NYSE:DE). All of these stocks' market caps are closest to UBER's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position CVS,56,961205,-5 TGT,78,4065099,21 FIS,88,9181248,0 ABNB,68,1610985,68 BTI,10,832550,3 VALE,35,2909481,0 DE,54,1804359,12 Average,55.6,3052132,14.1 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 55.6 hedge funds with bullish positions and the average amount invested in these stocks was $3052 million. That figure was $10094 million in UBER's case. Fidelity National Information Services Inc. (NYSE:FIS) is the most popular stock in this table. On the other hand British American Tobacco plc (NYSE:BTI) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Uber Technologies, Inc. (NYSE:UBER) is more popular among hedge funds. Our overall hedge fund sentiment score for UBER is 94.5. 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 returned 12.3% in 2021 through April 19th but still managed to beat the market by 0.9 percentage points. Hedge funds were also right about betting on UBER as the stock returned 13.4% since the end of December (through 4/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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