We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 835 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Urban Edge Properties (NYSE:UE).
Is Urban Edge Properties (NYSE:UE) a healthy stock for your portfolio? The best stock pickers are turning bullish. The number of long hedge fund positions moved up by 6 in recent months. Our calculations also showed that UE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). UE was in 19 hedge funds’ portfolios at the end of December. There were 13 hedge funds in our database with UE positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Israel Englander of Millennium Management
We leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets, and we want to take advantage of the declining lithium prices amid the COVID-19 pandemic. So we are checking out investment opportunities like this one. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a gander at the latest hedge fund action surrounding Urban Edge Properties (NYSE:UE).
How have hedgies been trading Urban Edge Properties (NYSE:UE)?
Heading into the first quarter of 2020, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 46% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UE over the last 18 quarters. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Renaissance Technologies, founded by Jim Simons, holds the largest position in Urban Edge Properties (NYSE:UE). Renaissance Technologies has a $40.6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Coming in second is Israel Englander of Millennium Management, with a $9.4 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other professional money managers that hold long positions comprise David Harding’s Winton Capital Management, John Overdeck and David Siegel’s Two Sigma Advisors and Daniel Johnson’s Gillson Capital. In terms of the portfolio weights assigned to each position Gillson Capital allocated the biggest weight to Urban Edge Properties (NYSE:UE), around 0.56% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, designating 0.22 percent of its 13F equity portfolio to UE.
As one would reasonably expect, key hedge funds were breaking ground themselves. Winton Capital Management, managed by David Harding, established the most valuable position in Urban Edge Properties (NYSE:UE). Winton Capital Management had $9.1 million invested in the company at the end of the quarter. Daniel Johnson’s Gillson Capital also initiated a $6.5 million position during the quarter. The following funds were also among the new UE investors: Paul Tudor Jones’s Tudor Investment Corp, Schonfeld Strategic Advisors, and Benjamin A. Smith’s Laurion Capital Management.
Let’s go over hedge fund activity in other stocks similar to Urban Edge Properties (NYSE:UE). We will take a look at Worthington Industries, Inc. (NYSE:WOR), Cadence Bancorporation (NYSE:CADE), First Merchants Corporation (NASDAQ:FRME), and Grupo Financiero Galicia S.A. (NASDAQ:GGAL). This group of stocks’ market caps are closest to UE’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WOR | 25 | 61206 | 1 |
| CADE | 22 | 177353 | 2 |
| FRME | 12 | 111170 | 2 |
| GGAL | 8 | 29637 | 0 |
| Average | 16.75 | 94842 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $95 million. That figure was $86 million in UE’s case. Worthington Industries, Inc. (NYSE:WOR) is the most popular stock in this table. On the other hand Grupo Financiero Galicia S.A. (NASDAQ:GGAL) is the least popular one with only 8 bullish hedge fund positions. Urban Edge Properties (NYSE:UE) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 10.1 percentage points. These stocks lost 13.0% in 2020 through April 6th but beat the market by 4.2 percentage points. Unfortunately UE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on UE were disappointed as the stock returned -57.4% during the same time period 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 so far this year.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
