Hedge Funds Are Buying United Parcel Service, Inc. (UPS)

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 873 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of June 30th, 2021. In this article we are going to take a look at smart money sentiment towards United Parcel Service, Inc. (NYSE:UPS).

Is United Parcel Service, Inc. (NYSE:UPS) worth your attention right now? Prominent investors were in an optimistic mood. The number of long hedge fund bets advanced by 8 recently. United Parcel Service, Inc. (NYSE:UPS) was in 52 hedge funds’ portfolios at the end of June. The all time high for this statistic is 57. Our calculations also showed that UPS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

John Overdeck of Two Sigma Advisors

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 take a gander at the key hedge fund action encompassing United Parcel Service, Inc. (NYSE:UPS).

Do Hedge Funds Think UPS Is A Good Stock To Buy Now?

At Q2’s end, a total of 52 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 18% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in UPS over the last 24 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings substantially (or already accumulated large positions).

Among these funds, Bill & Melinda Gates Foundation Trust held the most valuable stake in United Parcel Service, Inc. (NYSE:UPS), which was worth $582.7 million at the end of the second quarter. On the second spot was Citadel Investment Group which amassed $395.7 million worth of shares. Two Sigma Advisors, Renaissance Technologies, and D E Shaw 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 Cartenna Capital allocated the biggest weight to United Parcel Service, Inc. (NYSE:UPS), around 2.89% of its 13F portfolio. Masters Capital Management is also relatively very bullish on the stock, dishing out 2.45 percent of its 13F equity portfolio to UPS.

As one would reasonably expect, some big names have jumped into United Parcel Service, Inc. (NYSE:UPS) headfirst. Shellback Capital, managed by Doug Gordon, Jon Hilsabeck and Don Jabro, assembled the biggest position in United Parcel Service, Inc. (NYSE:UPS). Shellback Capital had $31.2 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also made a $27.3 million investment in the stock during the quarter. The other funds with brand new UPS positions are Peter Avellone’s Cartenna Capital, Gregg Moskowitz’s Interval Partners, and Donald Sussman’s Paloma Partners.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as United Parcel Service, Inc. (NYSE:UPS) but similarly valued. These stocks are T-Mobile US, Inc. (NASDAQ:TMUS), Texas Instruments Incorporated (NASDAQ:TXN), Costco Wholesale Corporation (NASDAQ:COST), McDonald’s Corporation (NYSE:MCD), Morgan Stanley (NYSE:MS), Medtronic plc (NYSE:MDT), and SAP SE (NYSE:SAP). This group of stocks’ market caps are similar to UPS’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 60.6 hedge funds with bullish positions and the average amount invested in these stocks was $3981 million. That figure was $2189 million in UPS’s case. T-Mobile US, Inc. (NYSE:TMUS) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 17 bullish hedge fund positions. United Parcel Service, Inc. (NYSE:UPS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UPS is 58.5. 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 negative signal and 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 22.9% in 2021 through October 1st and surpassed the market again by 5.6 percentage points. Unfortunately UPS wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); UPS investors were disappointed as the stock returned -12.3% since the end of June (through 10/1) 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 most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.