Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Umpqua Holdings Corp (NASDAQ:UMPQ).
Is Umpqua Holdings Corp (NASDAQ:UMPQ) the right pick for your portfolio? Investors who are in the know were getting more bullish. The number of long hedge fund bets rose by 2 lately. Umpqua Holdings Corp (NASDAQ:UMPQ) was in 25 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 26. Our calculations also showed that UMPQ isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 23 hedge funds in our database with UMPQ positions at the end of the fourth quarter.
To the average investor there are many methods investors can use to value stocks. A pair of the less utilized methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the elite investment managers can outclass the S&P 500 by a very impressive margin (see the details here). Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .
Richard S. Pzena of Pzena Investment Management
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery 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. Keeping this in mind we’re going to check out the fresh hedge fund action encompassing Umpqua Holdings Corp (NASDAQ:UMPQ).
Do Hedge Funds Think UMPQ Is A Good Stock To Buy Now?
At first quarter’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from the previous quarter. On the other hand, there were a total of 23 hedge funds with a bullish position in UMPQ a year ago. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their stakes meaningfully (or already accumulated large positions).
More specifically, Pzena Investment Management was the largest shareholder of Umpqua Holdings Corp (NASDAQ:UMPQ), with a stake worth $51.7 million reported as of the end of March. Trailing Pzena Investment Management was Fisher Asset Management, which amassed a stake valued at $45.3 million. Arrowstreet Capital, Millennium Management, and Schonfeld Strategic Advisors 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 Forest Hill Capital allocated the biggest weight to Umpqua Holdings Corp (NASDAQ:UMPQ), around 3.35% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, earmarking 1.45 percent of its 13F equity portfolio to UMPQ.
As one would reasonably expect, key money managers have been driving this bullishness. Sciencast Management, managed by Qing Li, established the largest position in Umpqua Holdings Corp (NASDAQ:UMPQ). Sciencast Management had $0.5 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $0.4 million position during the quarter. The other funds with new positions in the stock are Matthew Hulsizer’s PEAK6 Capital Management, Jinghua Yan’s TwinBeech Capital, and Peter Muller’s PDT Partners.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Umpqua Holdings Corp (NASDAQ:UMPQ) but similarly valued. We will take a look at Brighthouse Financial, Inc. (NASDAQ:BHF), Glaukos Corporation (NYSE:GKOS), Spire Inc. (NYSE:SR), New Jersey Resources Corp (NYSE:NJR), Legend Biotech Corporation (NASDAQ:LEGN), Red Rock Resorts, Inc. (NASDAQ:RRR), and 360 DigiTech, Inc. (NASDAQ:QFIN). This group of stocks’ market valuations match UMPQ’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BHF | 28 | 539727 | -5 |
| GKOS | 18 | 47095 | 5 |
| SR | 9 | 20905 | -6 |
| NJR | 12 | 26762 | -1 |
| LEGN | 12 | 315484 | -1 |
| RRR | 28 | 607053 | 2 |
| QFIN | 19 | 91928 | 5 |
| Average | 18 | 235565 | -0.1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $236 million. That figure was $245 million in UMPQ’s case. Brighthouse Financial, Inc. (NASDAQ:BHF) is the most popular stock in this table. On the other hand Spire Inc. (NYSE:SR) is the least popular one with only 9 bullish hedge fund positions. Umpqua Holdings Corp (NASDAQ:UMPQ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UMPQ is 78. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately UMPQ wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on UMPQ were disappointed as the stock returned 5.7% since the end of March (through 7/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
Follow Umpqua Holdings Corp (NASDAQ:UMPQ)
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Disclosure: None. This article was originally published at Insider Monkey.
