Investing in hedge funds can bring large profits, but it’s not for everybody, since hedge funds are available only for high-net-worth individuals. They generate significant returns for investors to justify their large fees and they allocate a lot of time and employ a complex analysis to determine the best stocks to invest in. A particularly interesting group of stocks that hedge funds like is the small-caps. The huge amount of capital does not allow hedge funds to invest a lot in small-caps, but our research showed that their most popular small-cap ideas are less efficiently priced and generate stronger returns than their large- and mega-cap picks and the broader market. That is why we follow the hedge fund activity in the small-cap space.
Union Bankshares Corp (NASDAQ:UBSH) was in 8 hedge funds’ portfolios at the end of the third quarter of 2015. UBSH has experienced an increase in enthusiasm from smart money in recent months. There were 7 hedge funds in our database with UBSH positions at the end of the previous quarter. 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 Lendingtree Inc (NASDAQ:TREE), Kearny Financial Corp. (NASDAQ:KRNY), and Caesarstone Sdot-Yam Ltd (NASDAQ:CSTE) to gather more data points.
Follow Atlantic Union Bankshares Corp (NASDAQ:AUB)
Follow Atlantic Union Bankshares Corp (NASDAQ:AUB)
To most investors, hedge funds are assumed to be unimportant, old investment vehicles of yesteryear. While there are greater than 8000 funds in operation at present, We hone in on the upper echelon of this club, approximately 700 funds. It is estimated that this group of investors command bulk of all hedge funds’ total asset base, and by tailing their first-class equity investments, Insider Monkey has unsheathed numerous investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points a year for a decade in their back tests.
Now, let’s review the key action encompassing Union Bankshares Corp (NASDAQ:UBSH).
Hedge fund activity in Union Bankshares Corp (NASDAQ:UBSH)
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jim Simons’ Renaissance Technologies holds the number one position in Union Bankshares Corp (NASDAQ:UBSH). Renaissance Technologies has a $10.8 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second most bullish fund manager is Elizabeth Park Capital Management, led by Fred Cummings, holding a $6.3 million position; 2.1% of its 13F portfolio is allocated to the company. Some other members of the smart money that hold long positions encompass Israel Englander’s Millennium Management, Roger Ibbotson’s Zebra Capital Management and John Overdeck and David Siegel’s Two Sigma Advisors.
As one would reasonably expect, some big names were breaking ground themselves. PDT Partners, managed by Peter Muller, established the most valuable position in Union Bankshares Corp (NASDAQ:UBSH). PDT Partners had $0.3 million invested in the company at the end of the quarter. Cliff Asness’s AQR Capital Management also made a $0.2 million investment in the stock during the quarter. The only other fund with a new position in the stock is David Cohen and Harold Levy’s Iridian Asset Management.
Let’s check out hedge fund activity in other stocks similar to Union Bankshares Corp (NASDAQ:UBSH). We will take a look at Lendingtree Inc (NASDAQ:TREE), Kearny Financial Corp. (NASDAQ:KRNY), Caesarstone Sdot-Yam Ltd (NASDAQ:CSTE), and Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB). This group of stocks’ market caps are closest to UBSH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TREE | 24 | 124278 | 6 |
| KRNY | 22 | 164038 | 1 |
| CSTE | 22 | 100532 | 5 |
| RRGB | 21 | 110890 | -4 |
As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $125 million. That figure was $22 million in UBSH’s case. Lendingtree Inc (NASDAQ:TREE) is the most popular stock in this table, while Red Robin Gourmet Burgers, Inc. (NASDAQ:RRGB) is the least popular one with only 21 bullish hedge fund positions. Compared to these stocks Union Bankshares Corp (NASDAQ:UBSH) is even less popular than RRGB. 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 required.
