Many prominent investors, including Warren Buffett, David Tepper and Stan Druckenmiller, have been cautious regarding the current bull market and missed out as the stock market reached another high in recent weeks. On the other hand, technology hedge funds weren’t timid and registered double digit market beating gains. Financials, energy and industrial stocks aren’t doing great but many of the stocks that delivered strong returns since March are still going very strong and hedge funds actually increased their positions in these stocks. In this article we will find out how hedge fund sentiment to Compania Cervecerias Unidas S.A. (NYSE:CCU) changed recently.
Compania Cervecerias Unidas S.A. (NYSE:CCU) was in 5 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 14. CCU investors should be aware of a decrease in support from the world’s most elite money managers recently. There were 8 hedge funds in our database with CCU positions at the end of the second quarter. Our calculations also showed that CCU isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
David Siegel of Two Sigma Advisors
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Now we’re going to take a gander at the fresh hedge fund action encompassing Compania Cervecerias Unidas S.A. (NYSE:CCU).
Hedge fund activity in Compania Cervecerias Unidas S.A. (NYSE:CCU)
At Q3’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -38% from one quarter earlier. By comparison, 9 hedge funds held shares or bullish call options in CCU a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of Compania Cervecerias Unidas S.A. (NYSE:CCU), with a stake worth $10.4 million reported as of the end of September. Trailing Renaissance Technologies was D E Shaw, which amassed a stake valued at $4.8 million. AQR Capital Management, Two Sigma Advisors, and Royce & Associates 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 Renaissance Technologies allocated the biggest weight to Compania Cervecerias Unidas S.A. (NYSE:CCU), around 0.01% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to CCU.
Because Compania Cervecerias Unidas S.A. (NYSE:CCU) has witnessed falling interest from the smart money, logic holds that there were a few funds who sold off their positions entirely by the end of the third quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group sold off the largest position of the 750 funds followed by Insider Monkey, valued at about $0.3 million in stock, and Israel Englander’s Millennium Management was right behind this move, as the fund sold off about $0.2 million worth. These transactions are important to note, as aggregate hedge fund interest fell by 3 funds by the end of the third quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Compania Cervecerias Unidas S.A. (NYSE:CCU) but similarly valued. We will take a look at Manchester United PLC (NYSE:MANU), Altra Industrial Motion Corp. (NASDAQ:AIMC), Broadstone Net Lease, Inc. (NYSE:BNL), Webster Financial Corporation (NYSE:WBS), Norbord Inc. (NYSE:OSB), Commercial Metals Company (NYSE:CMC), and FirstCash, Inc. (NASDAQ:FCFS). This group of stocks’ market valuations are closest to CCU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MANU | 15 | 47381 | 4 |
| AIMC | 22 | 118171 | 10 |
| BNL | 12 | 90873 | 12 |
| WBS | 25 | 264192 | -5 |
| OSB | 13 | 76406 | 2 |
| CMC | 20 | 103252 | -2 |
| FCFS | 21 | 168321 | -1 |
| Average | 18.3 | 124085 | 2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.3 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $20 million in CCU’s case. Webster Financial Corporation (NYSE:WBS) is the most popular stock in this table. On the other hand Broadstone Net Lease, Inc. (NYSE:BNL) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Compania Cervecerias Unidas S.A. (NYSE:CCU) is even less popular than BNL. Our overall hedge fund sentiment score for CCU is 12.7. 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. Hedge funds clearly dropped the ball on CCU as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through November 27th and still beat the market by 16.1 percentage points. A small number of hedge funds were also right about betting on CCU as the stock returned 11.7% since Q3 (through November 27th) and outperformed the market by an even larger margin.
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Disclosure: None. This article was originally published at Insider Monkey.
