We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards United Therapeutics Corporation (NASDAQ:UTHR) and determine whether hedge funds skillfully traded this stock.
United Therapeutics Corporation (NASDAQ:UTHR) has experienced an increase in hedge fund sentiment recently. United Therapeutics Corporation (NASDAQ:UTHR) was in 52 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic was previously 45. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 45 hedge funds in our database with UTHR positions at the end of the second quarter. Our calculations also showed that UTHR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).
Israel Englander of Millennium Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a look at the fresh hedge fund action encompassing United Therapeutics Corporation (NASDAQ:UTHR).
Do Hedge Funds Think UTHR Is A Good Stock To Buy Now?
At the end of September, a total of 52 of the hedge funds tracked by Insider Monkey were long this stock, a change of 16% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in UTHR a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
More specifically, Renaissance Technologies was the largest shareholder of United Therapeutics Corporation (NASDAQ:UTHR), with a stake worth $559 million reported as of the end of September. Trailing Renaissance Technologies was Avoro Capital Advisors (venBio Select Advisor), which amassed a stake valued at $553.7 million. Palo Alto Investors, AQR Capital Management, and Eversept Partners 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 Consonance Capital Management allocated the biggest weight to United Therapeutics Corporation (NASDAQ:UTHR), around 15.95% of its 13F portfolio. Avoro Capital Advisors (venBio Select Advisor) is also relatively very bullish on the stock, designating 8.7 percent of its 13F equity portfolio to UTHR.
With a general bullishness amongst the heavyweights, key money managers were leading the bulls’ herd. Soleus Capital, managed by Guy Levy, initiated the largest position in United Therapeutics Corporation (NASDAQ:UTHR). Soleus Capital had $18.8 million invested in the company at the end of the quarter. Kevin Molloy’s Iron Triangle Partners also initiated a $12.9 million position during the quarter. The other funds with brand new UTHR positions are Israel Englander’s Millennium Management, Prashanth Jayaram’s Tri Locum Partners, and Jinghua Yan’s TwinBeech Capital.
Let’s now take a look at hedge fund activity in other stocks similar to United Therapeutics Corporation (NASDAQ:UTHR). We will take a look at AGNC Investment Corp. (NASDAQ:AGNC), First Citizens BancShares Inc. (NASDAQ:FCNCA), The New York Times Company (NYSE:NYT), Huaneng Power International Inc (NYSE:HNP), Vistra Corp. (NYSE:VST), Berry Global Group Inc (NYSE:BERY), and Aspen Technology, Inc. (NASDAQ:AZPN). This group of stocks’ market values are closest to UTHR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AGNC | 16 | 81493 | -3 |
| FCNCA | 24 | 819665 | 3 |
| NYT | 45 | 2431038 | -3 |
| HNP | 4 | 5801 | 0 |
| VST | 38 | 1221296 | 6 |
| BERY | 39 | 1245908 | 2 |
| AZPN | 20 | 620030 | -3 |
| Average | 26.6 | 917890 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.6 hedge funds with bullish positions and the average amount invested in these stocks was $918 million. That figure was $2178 million in UTHR’s case. The New York Times Company (NYSE:NYT) is the most popular stock in this table. On the other hand Huaneng Power International Inc (NYSE:HNP) is the least popular one with only 4 bullish hedge fund positions. Compared to these stocks United Therapeutics Corporation (NASDAQ:UTHR) is more popular among hedge funds. Our overall hedge fund sentiment score for UTHR is 90. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks returned 29.6% in 2021 and managed to beat the market by another 3.6 percentage points. Hedge funds were also right about betting on UTHR as the stock returned 9.4% since the end of September (through 1/31) 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.
