At Insider Monkey, we pore over the filings of nearly 750 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of September 30. In this article, we will use that wealth of knowledge to determine whether or not Unisys Corporation (NYSE:UIS) makes for a good investment right now. We will also compare UIS against its similarly valued peers such as Collegium Pharmaceutical Inc (NASDAQ:COLL), Genco Shipping & Trading Limited (NYSE:GNK), Digi International Inc. (NASDAQ:DGII), and Inseego Corp. (NASDAQ:INSG).
Unisys Corporation (NYSE:UIS) has experienced an increase in enthusiasm from smart money recently. UIS was in 24 hedge funds’ portfolios at the end of September. There were 16 hedge funds in our database with UIS positions at the end of the previous quarter. Our calculations also showed that UIS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Paul Tudor Jones of Tudor Investment Corp
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to view the latest hedge fund action surrounding Unisys Corporation (NYSE:UIS).
Hedge fund activity in Unisys Corporation (NYSE:UIS)
Heading into the fourth quarter of 2019, a total of 24 of the hedge funds tracked by Insider Monkey were long this stock, a change of 50% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UIS over the last 17 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).
More specifically, Rutabaga Capital Management was the largest shareholder of Unisys Corporation (NYSE:UIS), with a stake worth $7.1 million reported as of the end of September. Trailing Rutabaga Capital Management was Royce & Associates, which amassed a stake valued at $6.3 million. D E Shaw, AQR Capital Management, and Portolan 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 Rutabaga Capital Management allocated the biggest weight to Unisys Corporation (NYSE:UIS), around 2.51% of its portfolio. Harvey Partners is also relatively very bullish on the stock, designating 1.2 percent of its 13F equity portfolio to UIS.
Now, some big names were leading the bulls’ herd. Hudson Bay Capital Management, managed by Sander Gerber, initiated the biggest position in Unisys Corporation (NYSE:UIS). Hudson Bay Capital Management had $1.7 million invested in the company at the end of the quarter. Jeffrey Moskowitz’s Harvey Partners also initiated a $1.7 million position during the quarter. The following funds were also among the new UIS investors: Paul Tudor Jones’s Tudor Investment Corp, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, and Minhua Zhang’s Weld Capital Management.
Let’s check out hedge fund activity in other stocks similar to Unisys Corporation (NYSE:UIS). We will take a look at Collegium Pharmaceutical Inc (NASDAQ:COLL), Genco Shipping & Trading Limited (NYSE:GNK), Digi International Inc. (NASDAQ:DGII), and Inseego Corp. (NASDAQ:INSG). This group of stocks’ market caps resemble UIS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| COLL | 13 | 63291 | -3 |
| GNK | 11 | 210512 | -1 |
| DGII | 12 | 49465 | -1 |
| INSG | 8 | 16483 | 0 |
| Average | 11 | 84938 | -1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $85 million. That figure was $43 million in UIS’s case. Collegium Pharmaceutical Inc (NASDAQ:COLL) is the most popular stock in this table. On the other hand Inseego Corp. (NASDAQ:INSG) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Unisys Corporation (NYSE:UIS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on UIS as the stock returned 53.2% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
