Many investors, including Carl Icahn or Stan Druckenmiller, have been saying for a while now that the current market is overvalued due to a low interest rate environment that leads to companies swapping their equity for debt and focusing mostly on short-term performance such as beating the quarterly earnings estimates. In the third quarter, many investors lost money due to unpredictable events such as the concerns over Valeant’s drug pricing policy that led to an overall drop among pharma stocks. Nevertheless, many of the stocks that tanked in the third quarter still sport strong fundamentals and their decline was more related to the general market sentiment rather than their individual performance and hedge funds kept their bullish stance. In this article we will find out how hedge fund sentiment to Unit Corporation (NYSE:UNT) changed recently.
Unit Corporation (NYSE:UNT) investors should pay attention to a decrease in support from the world’s most elite money managers recently. 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 Mirati Therapeutics, Inc. (NASDAQ:MRTX), AppFolio Inc (NASDAQ:APPF), and Blucora Inc (NASDAQ:BCOR) to gather more data points.
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Keeping this in mind, let’s take a peek at the key action regarding Unit Corporation (NYSE:UNT).
What does the smart money think about Unit Corporation (NYSE:UNT)?
Heading into Q4, a total of 12 of the hedge funds tracked by Insider Monkey were long this stock, a change of -14% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Chuck Royce’s Royce & Associates has the most valuable position in Unit Corporation (NYSE:UNT), worth close to $33.4 million, comprising 0.2% of its total 13F portfolio. Coming in second is Renaissance Technologies, led by Jim Simons, holding a $7.4 million position; less than 0.1% of its 13F portfolio is allocated to the stock. Some other hedge funds and institutional investors that are bullish encompass Ken Griffin’s Citadel Investment Group, D E Shaw and Mark Travis’s Intrepid Capital Management.
Seeing as Unit Corporation (NYSE:UNT) has witnessed a declination in interest from hedge fund managers, logic holds that there is a sect of fund managers who were dropping their positions entirely by the end of the third quarter. Interestingly, Steve Cohen’s Point72 Asset Management sold off the biggest position of the 700 funds followed by Insider Monkey, totaling an estimated $37.2 million in stock. Cliff Asness’s fund, AQR Capital Management, also dumped its stock, about $6.4 million worth. These transactions are interesting, as total hedge fund interest was cut by 2 funds by the end of the third quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Unit Corporation (NYSE:UNT) but similarly valued. These stocks are Mirati Therapeutics, Inc. (NASDAQ:MRTX), AppFolio Inc (NASDAQ:APPF), Blucora Inc (NASDAQ:BCOR), and Heritage Financial Corporation (NASDAQ:HFWA). All of these stocks’ market caps match UNT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRTX | 19 | 233452 | 8 |
| APPF | 5 | 13767 | -3 |
| BCOR | 16 | 68574 | -5 |
| HFWA | 10 | 56119 | 0 |
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $93 million. That figure was $77 million in UNT’s case. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is the most popular stock in this table. On the other hand AppFolio Inc (NASDAQ:APPF) is the least popular one with only 5 bullish hedge fund positions. Unit Corporation (NYSE:UNT) 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. In this regard MRTX might be a better candidate to consider a long position.
