The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of UMH Properties, Inc (NYSE:UMH) and find out how it is affected by hedge funds’ moves.
UMH Properties, Inc shares haven’t seen a lot of action during the third quarter. Overall, hedge fund sentiment was unchanged. The stock was in 4 hedge funds’ portfolios at the end of the third quarter of 2015. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as EnerNOC, Inc. (NASDAQ:ENOC), CSS Industries, Inc. (NYSE:CSS), and Preferred Apartment Communities Inc. (NYSE:APTS) to gather more data points.
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To the average investor there are a multitude of formulas stock market investors use to grade their stock investments. A pair of the most under-the-radar formulas are hedge fund and insider trading signals. Our researchers have shown that, historically, those who follow the best picks of the best hedge fund managers can beat their index-focused peers by a healthy amount (see the details here).
Keeping this in mind, let’s go over the new action surrounding UMH Properties, Inc (NYSE:UMH).
What does the smart money think about UMH Properties, Inc (NYSE:UMH)?
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, J. Alan Reid, Jr.’s Forward Management has the biggest position in UMH Properties, Inc (NYSE:UMH), worth close to $16.2 million, comprising 1.3% of its total 13F portfolio. The second most bullish fund is Peter Schliemann’s Rutabaga Capital Management, with a $11.4 million position; the fund has 1.4% of its 13F portfolio invested in the stock. The remaining members of the smart money with similar optimism encompass Jim Simons’ Renaissance Technologies and Israel Englander’s Millennium Management.
Earlier we told you that the aggregate hedge fund interest in the stock was unchanged and we view this as a negative development. Even though there weren’t any hedge funds dumping their holdings during the third quarter, there weren’t any hedge funds initiating brand new positions. This indicates that hedge funds, at the very best, perceive this stock as dead money and they haven’t identified any viable catalysts that can attract investor attention.
Let’s also examine hedge fund activity in other stocks similar to UMH Properties, Inc (NYSE:UMH). These stocks are EnerNOC, Inc. (NASDAQ:ENOC), CSS Industries, Inc. (NYSE:CSS), Preferred Apartment Communities Inc. (NYSE:APTS), and Baozun Inc (ADR) (NASDAQ:BZUN). This group of stocks’ market valuations are closest to UMH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ENOC | 13 | 13868 | 3 |
| CSS | 5 | 37128 | -1 |
| APTS | 5 | 4882 | -2 |
| BZUN | 5 | 6055 | -2 |
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $15 million, below the $32 million figure in UMH’s case. EnerNOC, Inc. (NASDAQ:ENOC) is the most popular stock in this table. On the other hand CSS Industries, Inc. (NYSE:CSS) is the least popular one with only 5 bullish hedge fund positions, while UMH Properties, Inc (NYSE:UMH) is even less popular than CSS. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
