After several tireless days we have finished crunching the numbers from nearly 750 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of June 28. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards Under Armour Inc (NYSE:UA).
Is Under Armour Inc (NYSE:UA) a sound stock to buy now? Investors who are in the know are becoming hopeful. The number of long hedge fund positions inched up by 8 recently. Our calculations also showed that UA isn’t among the 30 most popular stocks among hedge funds (see the video below). UA was in 38 hedge funds’ portfolios at the end of June. There were 30 hedge funds in our database with UA holdings at the end of the previous quarter.
Video: Click the image to 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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (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 25.7% through September 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Unlike this former hedge fund manager who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. Let’s take a look at the fresh hedge fund action regarding Under Armour Inc (NYSE:UA).
What have hedge funds been doing with Under Armour Inc (NYSE:UA)?
Heading into the third quarter of 2019, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 27% from the previous quarter. On the other hand, there were a total of 22 hedge funds with a bullish position in UA a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Adage Capital Management was the largest shareholder of Under Armour Inc (NYSE:UA), with a stake worth $325.8 million reported as of the end of March. Trailing Adage Capital Management was Bares Capital Management, which amassed a stake valued at $223 million. Alyeska Investment Group, D E Shaw, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, specific money managers have jumped into Under Armour Inc (NYSE:UA) headfirst. Holocene Advisors, managed by Brandon Haley, established the most valuable position in Under Armour Inc (NYSE:UA). Holocene Advisors had $19.3 million invested in the company at the end of the quarter. Greg Poole’s Echo Street Capital Management also made a $17.1 million investment in the stock during the quarter. The following funds were also among the new UA investors: Michael Gelband’s ExodusPoint Capital, Lee Ainslie’s Maverick Capital, and Steve Pigott’s Fort Baker Capital Management.
Let’s go over hedge fund activity in other stocks similar to Under Armour Inc (NYSE:UA). We will take a look at Shaw Communications Inc (NYSE:SJR), Teledyne Technologies Incorporated (NYSE:TDY), Alleghany Corporation (NYSE:Y), and Avantor, Inc. (NYSE:AVTR). This group of stocks’ market valuations resemble UA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SJR | 12 | 286524 | 0 |
| TDY | 26 | 642702 | -2 |
| Y | 26 | 361790 | 3 |
| AVTR | 30 | 1081752 | 30 |
| Average | 23.5 | 593192 | 7.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $593 million. That figure was $1083 million in UA’s case. Avantor, Inc. (NYSE:AVTR) is the most popular stock in this table. On the other hand Shaw Communications Inc (NYSE:SJR) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Under Armour Inc (NYSE:UA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately UA wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on UA were disappointed as the stock returned -18.3% during the third 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 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.
