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. We at Insider Monkey have plowed through 821 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, a week after the market trough. In this article we look at what those investors think of Umpqua Holdings Corp (NASDAQ:UMPQ).
Is Umpqua Holdings Corp (NASDAQ:UMPQ) a bargain? Money managers are becoming more confident. The number of long hedge fund bets moved up by 7 lately. Our calculations also showed that UMPQ isn’t among the 30 most popular stocks among hedge funds (click for Q1 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
Richard S. Pzena of Pzena Investment Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out trades like this one. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now we’re going to take a peek at the new hedge fund action surrounding Umpqua Holdings Corp (NASDAQ:UMPQ).
Hedge fund activity in Umpqua Holdings Corp (NASDAQ:UMPQ)
At the end of the first quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 44% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UMPQ over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Citadel Investment Group held the most valuable stake in Umpqua Holdings Corp (NASDAQ:UMPQ), which was worth $49.8 million at the end of the third quarter. On the second spot was Fisher Asset Management which amassed $31.6 million worth of shares. Pzena Investment Management, Two Sigma Advisors, and AQR Capital Management 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 Forest Hill Capital allocated the biggest weight to Umpqua Holdings Corp (NASDAQ:UMPQ), around 3.31% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, designating 1.58 percent of its 13F equity portfolio to UMPQ.
With a general bullishness amongst the heavyweights, some big names have been driving this bullishness. Pzena Investment Management, managed by Richard S. Pzena, initiated the biggest position in Umpqua Holdings Corp (NASDAQ:UMPQ). Pzena Investment Management had $16.4 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $11.8 million investment in the stock during the quarter. The other funds with brand new UMPQ positions are Daniel Johnson’s Gillson Capital, Jeff Osher’s No Street Capital, and Anton Schutz’s Mendon Capital Advisors.
Let’s now review hedge fund activity in other stocks similar to Umpqua Holdings Corp (NASDAQ:UMPQ). We will take a look at TopBuild Corp (NYSE:BLD), LendingTree, Inc (NASDAQ:TREE), Lattice Semiconductor Corporation (NASDAQ:LSCC), and Assured Guaranty Ltd. (NYSE:AGO). This group of stocks’ market valuations match UMPQ’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BLD | 20 | 79991 | -9 |
| TREE | 21 | 74029 | -5 |
| LSCC | 26 | 531051 | -6 |
| AGO | 28 | 299640 | -5 |
| Average | 23.75 | 246178 | -6.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.75 hedge funds with bullish positions and the average amount invested in these stocks was $246 million. That figure was $184 million in UMPQ’s case. Assured Guaranty Ltd. (NYSE:AGO) is the most popular stock in this table. On the other hand TopBuild Corp (NYSE:BLD) is the least popular one with only 20 bullish hedge fund positions. Umpqua Holdings Corp (NASDAQ:UMPQ) is not the least popular stock in this group but hedge fund interest is still below average. 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 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately UMPQ wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); UMPQ investors were disappointed as the stock returned 11.8% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Follow Umpqua Holdings Corp (NASDAQ:UMPQ)
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Disclosure: None. This article was originally published at Insider Monkey.
