A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31, so let’s proceed with the discussion of the hedge fund sentiment on Domtar Corporation (NYSE:UFS).
Is Domtar Corporation (NYSE:UFS) worth your attention right now? The best stock pickers are turning less bullish. The number of bullish hedge fund positions dropped by 6 in recent months. Our calculations also showed that ufs isn’t among the 30 most popular stocks among hedge funds. UFS was in 19 hedge funds’ portfolios at the end of the first quarter of 2019. There were 25 hedge funds in our database with UFS 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 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 30.9% through May 30, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman, GLG Partners
We’re going to take a glance at the latest hedge fund action encompassing Domtar Corporation (NYSE:UFS).
Hedge fund activity in Domtar Corporation (NYSE:UFS)
At Q1’s end, a total of 19 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -24% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards UFS over the last 15 quarters. With hedge funds’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings meaningfully (or already accumulated large positions).
Among these funds, Citadel Investment Group held the most valuable stake in Domtar Corporation (NYSE:UFS), which was worth $66.6 million at the end of the first quarter. On the second spot was Millennium Management which amassed $23.9 million worth of shares. Moreover, GLG Partners, Renaissance Technologies, and Two Sigma Advisors were also bullish on Domtar Corporation (NYSE:UFS), allocating a large percentage of their portfolios to this stock.
Because Domtar Corporation (NYSE:UFS) has witnessed a decline in interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few fund managers who were dropping their full holdings in the third quarter. It’s worth mentioning that Clint Carlson’s Carlson Capital dumped the biggest stake of all the hedgies tracked by Insider Monkey, valued at an estimated $1.8 million in call options, and Sander Gerber’s Hudson Bay Capital Management was right behind this move, as the fund cut about $0.9 million worth. These bearish behaviors are interesting, as total hedge fund interest fell by 6 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to Domtar Corporation (NYSE:UFS). We will take a look at Mercury Systems Inc (NASDAQ:MRCY), FirstService Corporation (NASDAQ:FSV), Gold Fields Limited (NYSE:GFI), and Ardagh Group S.A. (NYSE:ARD). This group of stocks’ market valuations are similar to UFS’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MRCY | 15 | 58014 | 9 |
| FSV | 11 | 144724 | -2 |
| GFI | 10 | 208835 | 1 |
| ARD | 12 | 53581 | 2 |
| Average | 12 | 116289 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $116 million. That figure was $179 million in UFS’s case. Mercury Systems Inc (NASDAQ:MRCY) is the most popular stock in this table. On the other hand Gold Fields Limited (NYSE:GFI) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Domtar Corporation (NYSE:UFS) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately UFS wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on UFS were disappointed as the stock returned -14.9% during the same 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.
