Hedge Funds Are Souring On UDR, Inc. (UDR)

In this article we will analyze whether UDR, Inc. (NYSE:UDR) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market by double digits annually.

Is UDR, Inc. (NYSE:UDR) a buy right now? Money managers were selling. The number of bullish hedge fund positions retreated by 6 recently. UDR, Inc. (NYSE:UDR) was in 24 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 30. Our calculations also showed that UDR isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

If you’d ask most traders, hedge funds are viewed as unimportant, old investment vehicles of yesteryear. While there are more than 8000 funds trading at present, We hone in on the elite of this group, around 850 funds. These investment experts oversee bulk of all hedge funds’ total asset base, and by following their first-class picks, Insider Monkey has uncovered various investment strategies that have historically outpaced Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 185.4% since March 2017 (through August 2021) and beat the S&P 500 Index by more than 79 percentage points. You can download a sample issue of this newsletter on our website.

Phillip Gross of Adage Capital

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 look at the recent hedge fund action surrounding UDR, Inc. (NYSE:UDR).

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

At the end of the second quarter, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of -20% from the first quarter of 2020. By comparison, 29 hedge funds held shares or bullish call options in UDR 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, Zimmer Partners held the most valuable stake in UDR, Inc. (NYSE:UDR), which was worth $110.9 million at the end of the second quarter. On the second spot was Millennium Management which amassed $24.3 million worth of shares. Adage Capital Management, Diamond Hill Capital, and Renaissance Technologies 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 Hill Winds Capital allocated the biggest weight to UDR, Inc. (NYSE:UDR), around 4.29% of its 13F portfolio. Zimmer Partners is also relatively very bullish on the stock, earmarking 1.49 percent of its 13F equity portfolio to UDR.

Due to the fact that UDR, Inc. (NYSE:UDR) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there is a sect of fund managers who were dropping their full holdings heading into Q3. It’s worth mentioning that John Overdeck and David Siegel’s Two Sigma Advisors dumped the biggest investment of the “upper crust” of funds followed by Insider Monkey, valued at close to $13.5 million in stock, and Jeffrey Talpins’s Element Capital Management was right behind this move, as the fund dumped about $11 million worth. These transactions are important to note, as total hedge fund interest was cut by 6 funds heading into Q3.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as UDR, Inc. (NYSE:UDR) but similarly valued. These stocks are Fair Isaac Corporation (NYSE:FICO), Apollo Global Management Inc (NYSE:APO), Shaw Communications Inc (NYSE:SJR), News Corp (NASDAQ:NWS), Loews Corporation (NYSE:L), Solaredge Technologies Inc (NASDAQ:SEDG), and PulteGroup, Inc. (NYSE:PHM). This group of stocks’ market valuations resemble UDR’s market valuation.

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As you can see these stocks had an average of 29.4 hedge funds with bullish positions and the average amount invested in these stocks was $936 million. That figure was $251 million in UDR’s case. Apollo Global Management Inc (NYSE:APO) is the most popular stock in this table. On the other hand News Corp (NASDAQ:NWS) is the least popular one with only 19 bullish hedge fund positions. UDR, Inc. (NYSE:UDR) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UDR is 36.9. 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 gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. A small number of hedge funds were also right about betting on UDR as the stock returned 13.8% since the end of the second quarter (through 10/22) and outperformed the market by an even larger margin.

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