Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Univar Solutions Inc (NYSE:UNVR).
Univar Solutions Inc (NYSE:UNVR) investors should be aware of an increase in hedge fund interest recently. Univar Solutions Inc (NYSE:UNVR) was in 28 hedge funds’ portfolios at the end of June. The all time high for this statistic is 43. Our calculations also showed that UNVR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). We have been able to outperform the passive index funds by tracking the moves of corporate insiders and hedge funds, and we believe small investors can benefit a lot from reading hedge fund investor letters and 13F filings.
Harold Levy of Iridian Asset Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. 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 homepage. Now let’s review the key hedge fund action regarding Univar Solutions Inc (NYSE:UNVR).
Do Hedge Funds Think UNVR Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 28 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 12% from one quarter earlier. By comparison, 31 hedge funds held shares or bullish call options in UNVR a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Lyrical Asset Management held the most valuable stake in Univar Solutions Inc (NYSE:UNVR), which was worth $154.3 million at the end of the second quarter. On the second spot was Iridian Asset Management which amassed $139.9 million worth of shares. First Pacific Advisors LLC, Paradice Investment Management, and FPR 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 Atlantic Investment Management allocated the biggest weight to Univar Solutions Inc (NYSE:UNVR), around 15.5% of its 13F portfolio. Paradice Investment Management is also relatively very bullish on the stock, dishing out 3.02 percent of its 13F equity portfolio to UNVR.
As aggregate interest increased, key hedge funds have been driving this bullishness. ExodusPoint Capital, managed by Michael Gelband, assembled the biggest position in Univar Solutions Inc (NYSE:UNVR). ExodusPoint Capital had $2.2 million invested in the company at the end of the quarter. Donald Sussman’s Paloma Partners also made a $1.2 million investment in the stock during the quarter. The following funds were also among the new UNVR investors: Greg Eisner’s Engineers Gate Manager, Lee Ainslie’s Maverick Capital, and Qing Li’s Sciencast Management.
Let’s now take a look at hedge fund activity in other stocks similar to Univar Solutions Inc (NYSE:UNVR). These stocks are Portland General Electric Company (NYSE:POR), Envestnet Inc (NYSE:ENV), Black Hills Corporation (NYSE:BKH), Atlantica Sustainable Infrastructure plc (NASDAQ:AY), PennyMac Financial Services Inc (NYSE:PFSI), LivaNova PLC (NASDAQ:LIVN), and Olink Holding AB (publ) (NASDAQ:OLK). All of these stocks’ market caps match UNVR’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| POR | 21 | 70216 | 0 |
| ENV | 17 | 329409 | -1 |
| BKH | 14 | 62523 | -4 |
| AY | 14 | 41097 | 1 |
| PFSI | 26 | 686257 | 1 |
| LIVN | 36 | 901546 | 8 |
| OLK | 16 | 116314 | -4 |
| Average | 20.6 | 315337 | 0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.6 hedge funds with bullish positions and the average amount invested in these stocks was $315 million. That figure was $705 million in UNVR’s case. LivaNova PLC (NASDAQ:LIVN) is the most popular stock in this table. On the other hand Black Hills Corporation (NYSE:BKH) is the least popular one with only 14 bullish hedge fund positions. Univar Solutions Inc (NYSE:UNVR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UNVR is 59.4. 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 gained 24.9% in 2021 through October 15th and still beat the market by 4.5 percentage points. Hedge funds were also right about betting on UNVR as the stock returned 5.6% since the end of Q2 (through 10/15) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Univar Solutions Inc. (NYSE:UNVR)
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Disclosure: None. This article was originally published at Insider Monkey.
