Hedge Funds Aren’t Crazy About Union Pacific Corporation (UNP) Anymore

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Union Pacific Corporation (NYSE:UNP), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is Union Pacific Corporation (NYSE:UNP) undervalued? Investors who are in the know were turning less bullish. The number of long hedge fund positions retreated by 6 lately. Union Pacific Corporation (NYSE:UNP) was in 63 hedge funds’ portfolios at the end of the third quarter of 2021. The all time high for this statistic is 75. Our calculations also showed that UNP isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). There were 69 hedge funds in our database with UNP holdings at the end of June.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so 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. Keeping this in mind let’s analyze the fresh hedge fund action surrounding Union Pacific Corporation (NYSE:UNP).

Eric Mandelblatt of Soroban Capital Partners

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

At the end of September, a total of 63 of the hedge funds tracked by Insider Monkey were long this stock, a change of -9% from one quarter earlier. On the other hand, there were a total of 74 hedge funds with a bullish position in UNP a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, TCI Fund Management held the most valuable stake in Union Pacific Corporation (NYSE:UNP), which was worth $1121.4 million at the end of the third quarter. On the second spot was Soroban Capital Partners which amassed $1071.3 million worth of shares. Fisher Asset Management, Citadel Investment Group, 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 Soroban Capital Partners allocated the biggest weight to Union Pacific Corporation (NYSE:UNP), around 10.03% of its 13F portfolio. Skylands Capital is also relatively very bullish on the stock, dishing out 7.44 percent of its 13F equity portfolio to UNP.

Due to the fact that Union Pacific Corporation (NYSE:UNP) has faced falling interest from hedge fund managers, logic holds that there was a specific group of money managers that elected to cut their positions entirely by the end of the third quarter. At the top of the heap, Jaime Sterne’s Skye Global Management cut the biggest position of the “upper crust” of funds monitored by Insider Monkey, worth close to $53.2 million in call options. Zach Schreiber’s fund, Point State Capital, also sold off its call options, about $52.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 6 funds by the end of the third quarter.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Union Pacific Corporation (NYSE:UNP) but similarly valued. We will take a look at BlackRock, Inc. (NYSE:BLK), The Goldman Sachs Group, Inc. (NYSE:GS), TotalEnergies SE (NYSE:TTE), Advanced Micro Devices, Inc. (NASDAQ:AMD), International Business Machines Corp. (NYSE:IBM), ServiceNow Inc (NYSE:NOW), and Sanofi (NASDAQ:SNY). This group of stocks’ market values resemble UNP’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 49.4 hedge funds with bullish positions and the average amount invested in these stocks was $3344 million. That figure was $4886 million in UNP’s case. ServiceNow Inc (NYSE:NOW) is the most popular stock in this table. On the other hand TotalEnergies SE (NYSE:TTE) is the least popular one with only 16 bullish hedge fund positions. Union Pacific Corporation (NYSE:UNP) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UNP is 57.3. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on UNP as the stock returned 20.2% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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