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 (10 coronavirus predictions).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. 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 835 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 December 31st. In this article we look at what those investors think of Universal Display Corporation (NASDAQ:OLED).
Universal Display Corporation (NASDAQ:OLED) has seen an increase in enthusiasm from smart money of late. OLED was in 31 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 26 hedge funds in our database with OLED positions at the end of the previous quarter. Our calculations also showed that OLED 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).
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 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 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.
Andrew Sandler of Sandler Capital Management
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. 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 look at the key hedge fund action encompassing Universal Display Corporation (NASDAQ:OLED).
How are hedge funds trading Universal Display Corporation (NASDAQ:OLED)?
At Q4’s end, a total of 31 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 19% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards OLED 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.
According to Insider Monkey’s hedge fund database, Renaissance Technologies has the most valuable position in Universal Display Corporation (NASDAQ:OLED), worth close to $79.5 million, corresponding to 0.1% of its total 13F portfolio. The second most bullish fund manager is John Overdeck and David Siegel of Two Sigma Advisors, with a $66.5 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that are bullish include Ken Griffin’s Citadel Investment Group, Ken Griffin’s Citadel Investment Group and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Navellier & Associates allocated the biggest weight to Universal Display Corporation (NASDAQ:OLED), around 1.38% of its 13F portfolio. Sandler Capital Management is also relatively very bullish on the stock, setting aside 0.41 percent of its 13F equity portfolio to OLED.
Now, some big names have jumped into Universal Display Corporation (NASDAQ:OLED) headfirst. Winton Capital Management, managed by David Harding, established the biggest position in Universal Display Corporation (NASDAQ:OLED). Winton Capital Management had $18.7 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $7.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Anand Parekh’s Alyeska Investment Group, Principal Global Investors’s Columbus Circle Investors, and Andrew Sandler’s Sandler Capital Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Universal Display Corporation (NASDAQ:OLED) but similarly valued. We will take a look at MGM Growth Properties LLC (NYSE:MGP), 58.com Inc (NYSE:WUBA), National Oilwell Varco, Inc. (NYSE:NOV), and Vail Resorts, Inc. (NYSE:MTN). All of these stocks’ market caps match OLED’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MGP | 29 | 815269 | 8 |
| WUBA | 21 | 475926 | -5 |
| NOV | 31 | 1019880 | 5 |
| MTN | 33 | 552480 | -6 |
| Average | 28.5 | 715889 | 0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.5 hedge funds with bullish positions and the average amount invested in these stocks was $716 million. That figure was $329 million in OLED’s case. Vail Resorts, Inc. (NYSE:MTN) is the most popular stock in this table. On the other hand 58.com Inc (NYSE:WUBA) is the least popular one with only 21 bullish hedge fund positions. Universal Display Corporation (NASDAQ:OLED) 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 22.3% in 2020 through March 16th but beat the market by 3.2 percentage points. Unfortunately OLED wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on OLED were disappointed as the stock returned -42.1% 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.
