Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of March. At Insider Monkey, we follow nearly 750 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Ultra Petroleum Corp. (NYSE:UPL), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Ultra Petroleum Corp. (NASDAQ:UPL) investors should pay attention to a decrease in enthusiasm from smart money of late. Our calculations also showed that UPL isn’t among the 30 most popular stocks among hedge funds.
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.
Let’s take a gander at the recent hedge fund action regarding Ultra Petroleum Corp. (NASDAQ:UPL).
How have hedgies been trading Ultra Petroleum Corp. (NASDAQ:UPL)?
Heading into the second quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from the fourth quarter of 2018. Below, you can check out the change in hedge fund sentiment towards UPL over the last 15 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Fir Tree held the most valuable stake in Ultra Petroleum Corp. (NASDAQ:UPL), which was worth $22.2 million at the end of the first quarter. On the second spot was Avenue Capital which amassed $7.7 million worth of shares. Moreover, Renaissance Technologies, Citadel Investment Group, and Oaktree Capital Management were also bullish on Ultra Petroleum Corp. (NYSE:UPL), allocating a large percentage of their portfolios to this stock.
Since Ultra Petroleum Corp. (NASDAQ:UPL) has witnessed a decline in interest from the smart money, logic holds that there lies a certain “tier” of fund managers who sold off their entire stakes last quarter. Interestingly, Matthew Knauer and Mina Faltas’s Nokota Management sold off the largest stake of all the hedgies tracked by Insider Monkey, comprising about $0.9 million in stock, and Robert Henry Lynch’s Aristeia Capital was right behind this move, as the fund dropped about $0.8 million worth. These transactions are interesting, as aggregate hedge fund interest fell by 4 funds last quarter.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Ultra Petroleum Corp. (NASDAQ:UPL) but similarly valued. These stocks are Electrameccanica Vehicles Corp. (NASDAQ:SOLO), Organovo Holdings Inc (NASDAQ:ONVO), Superior Industries International Inc. (NYSE:SUP), and RealNetworks Inc (NASDAQ:RNWK). All of these stocks’ market caps resemble UPL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SOLO | 3 | 2544 | 1 |
| ONVO | 4 | 4512 | 0 |
| SUP | 12 | 12055 | -3 |
| RNWK | 10 | 35879 | 3 |
| Average | 7.25 | 13748 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7.25 hedge funds with bullish positions and the average amount invested in these stocks was $14 million. That figure was $32 million in UPL’s case. Superior Industries International Inc. (NYSE:SUP) is the most popular stock in this table. On the other hand Electrameccanica Vehicles Corp. (NASDAQ:SOLO) is the least popular one with only 3 bullish hedge fund positions. Ultra Petroleum Corp. (NASDAQ:UPL) 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 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately UPL wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on UPL were disappointed as the stock returned -45.1% 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 so far in Q2.
Disclosure: None. This article was originally published at Insider Monkey.