Hedge Funds Are Buying United Rentals, Inc. (URI)

In this article we will take a look at whether hedge funds think United Rentals, Inc. (NYSE:URI) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.

United Rentals, Inc. (NYSE:URI) has experienced an increase in enthusiasm from smart money recently. United Rentals, Inc. (NYSE:URI) was in 47 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 59. Our calculations also showed that URI isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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Ryan Tolkin, CIO of Schonfeld Strategic Advisors

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

At Q2’s end, a total of 47 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 15% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards URI over the last 24 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Andrew Wellington and Jeff Keswin’s Lyrical Asset Management has the largest position in United Rentals, Inc. (NYSE:URI), worth close to $469.2 million, comprising 5.7% of its total 13F portfolio. The second largest stake is held by Ross Turner of Pelham Capital, with a $116.8 million position; 6.9% of its 13F portfolio is allocated to the stock. Remaining peers that hold long positions encompass Brandon Haley’s Holocene Advisors, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Pelham Capital allocated the biggest weight to United Rentals, Inc. (NYSE:URI), around 6.91% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, dishing out 5.68 percent of its 13F equity portfolio to URI.

As aggregate interest increased, specific money managers were breaking ground themselves. Citadel Investment Group, managed by Ken Griffin, initiated the most valuable position in United Rentals, Inc. (NYSE:URI). Citadel Investment Group had $28.9 million invested in the company at the end of the quarter. Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital also made a $25.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Kamyar Khajavi’s MIK Capital, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as United Rentals, Inc. (NYSE:URI) but similarly valued. We will take a look at Dollar Tree, Inc. (NASDAQ:DLTR), NovoCure Limited (NASDAQ:NVCR), W.W. Grainger, Inc. (NYSE:GWW), CNH Industrial NV (NYSE:CNHI), Trip.com Group Limited (NASDAQ:TCOM), MongoDB, Inc. (NASDAQ:MDB), and CGI Inc. (NYSE:GIB). All of these stocks’ market caps resemble URI’s market cap.

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As you can see these stocks had an average of 31.3 hedge funds with bullish positions and the average amount invested in these stocks was $961 million. That figure was $1173 million in URI’s case. MongoDB, Inc. (NASDAQ:MDB) is the most popular stock in this table. On the other hand CGI Inc. (NYSE:GIB) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks United Rentals, Inc. (NYSE:URI) is more popular among hedge funds. Our overall hedge fund sentiment score for URI is 83.9. 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 returned 22.9% in 2021 through October 1st but still managed to beat the market by 5.6 percentage points. Hedge funds were also right about betting on URI as the stock returned 12.3% since the end of June (through 10/1) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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