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 March 31. In this article, we will use that wealth of knowledge to determine whether or not Union Pacific Corporation (NYSE:UNP) makes for a good investment right now.
Is Union Pacific Corporation (NYSE:UNP) a buy right now? The smart money is taking a bearish view. The number of long hedge fund bets dropped by 1 lately. Our calculations also showed that UNP isn’t among the 30 most popular stocks among hedge funds.
According to most shareholders, hedge funds are seen as underperforming, old investment vehicles of the past. While there are more than 8000 funds trading today, Our experts hone in on the top tier of this club, about 750 funds. These investment experts have their hands on most of the hedge fund industry’s total capital, and by observing their inimitable investments, Insider Monkey has come up with a number of investment strategies that have historically outrun the broader indices. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points per year since its inception in May 2014 through the end of May. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 30.9% since February 2017 (through May 30th) even though the market was up nearly 24% during the same period. We just shared a list of 5 short targets in our latest quarterly update and they are already down an average of 11.9% in less than a couple of weeks whereas our long picks outperformed the market by 2 percentage points in this volatile 2 week period.
We’re going to view the latest hedge fund action surrounding Union Pacific Corporation (NYSE:UNP).
How have hedgies been trading Union Pacific Corporation (NYSE:UNP)?
Heading into the second quarter of 2019, a total of 54 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -2% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in UNP over the last 15 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Egerton Capital Limited was the largest shareholder of Union Pacific Corporation (NYSE:UNP), with a stake worth $1292.4 million reported as of the end of March. Trailing Egerton Capital Limited was Lone Pine Capital, which amassed a stake valued at $554 million. Soroban Capital Partners, Arrowstreet Capital, and Millennium Management were also very fond of the stock, giving the stock large weights in their portfolios.
Because Union Pacific Corporation (NYSE:UNP) has faced a decline in interest from hedge fund managers, logic holds that there is a sect of hedge funds that elected to cut their entire stakes last quarter. Interestingly, Matt Simon (Citadel)’s Ashler Capital dropped the biggest position of the “upper crust” of funds watched by Insider Monkey, worth about $91.1 million in stock, and Richard Chilton’s Chilton Investment Company was right behind this move, as the fund said goodbye to about $64.1 million worth. These transactions are interesting, as total hedge fund interest fell by 1 funds last quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Union Pacific Corporation (NYSE:UNP) but similarly valued. We will take a look at Amgen, Inc. (NASDAQ:AMGN), Honeywell International Inc. (NYSE:HON), Accenture Plc (NYSE:ACN), and United Technologies Corporation (NYSE:UTX). This group of stocks’ market caps are closest to UNP’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| AMGN | 46 | 2982796 | 0 |
| HON | 56 | 2984847 | -1 |
| ACN | 40 | 976533 | 6 |
| UTX | 59 | 6558837 | -5 |
| Average | 50.25 | 3375753 | 0 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 50.25 hedge funds with bullish positions and the average amount invested in these stocks was $3376 million. That figure was $4425 million in UNP’s case. United Technologies Corporation (NYSE:UTX) is the most popular stock in this table. On the other hand Accenture Plc (NYSE:ACN) is the least popular one with only 40 bullish hedge fund positions. Union Pacific Corporation (NYSE:UNP) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on UNP as the stock returned 1.9% during the same period and outperformed the market by an even larger margin. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
