At Insider Monkey we track the activity of some of the best-performing hedge funds like Appaloosa Management, Baupost, and Tiger Global because we determined that some of the stocks that they are collectively bullish on can help us generate returns above the broader indices. Out of thousands of stocks that hedge funds invest in, small-caps can provide the best returns over the long term due to the fact that these companies are less efficiently priced and are usually under the radars of mass-media, analysts and dumb money. This is why we follow the smart money moves in the small-cap space.
United Therapeutics Corporation (NASDAQ:UTHR) has experienced a decrease in activity from the world’s largest hedge funds in recent months. Our calculations also showed that uthr isn’t among the 30 most popular stocks among hedge funds.
To most traders, hedge funds are viewed as underperforming, old investment tools of the past. While there are greater than 8000 funds trading at present, We look at the masters of this group, approximately 750 funds. Most estimates calculate that this group of people shepherd most of all hedge funds’ total asset base, and by shadowing their finest investments, Insider Monkey has figured out many investment strategies that have historically outstripped the market. Insider Monkey’s flagship hedge fund strategy beat the S&P 500 index by around 5 percentage points a 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.
Let’s analyze the fresh hedge fund action surrounding United Therapeutics Corporation (NASDAQ:UTHR).
How have hedgies been trading United Therapeutics Corporation (NASDAQ:UTHR)?
At Q1’s end, a total of 21 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -9% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UTHR over the last 15 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, AQR Capital Management held the most valuable stake in United Therapeutics Corporation (NASDAQ:UTHR), which was worth $292.2 million at the end of the first quarter. On the second spot was Renaissance Technologies which amassed $263.1 million worth of shares. Moreover, Palo Alto Investors, Consonance Capital Management, and Great Point Partners were also bullish on United Therapeutics Corporation (NASDAQ:UTHR), allocating a large percentage of their portfolios to this stock.
Judging by the fact that United Therapeutics Corporation (NASDAQ:UTHR) has faced falling interest from the aggregate hedge fund industry, it’s easy to see that there exists a select few funds who sold off their full holdings by the end of the third quarter. Intriguingly, Steve Cohen’s Point72 Asset Management dumped the largest position of the 700 funds watched by Insider Monkey, comprising an estimated $14.6 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dumped about $1.9 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as United Therapeutics Corporation (NASDAQ:UTHR) but similarly valued. We will take a look at Chemed Corporation (NYSE:CHE), Semiconductor Manufacturing International Corporation (NYSE:SMI), Pegasystems Inc. (NASDAQ:PEGA), and Penumbra Inc (NYSE:PEN). This group of stocks’ market valuations are closest to UTHR’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CHE | 21 | 416451 | -3 |
| SMI | 4 | 8945 | 0 |
| PEGA | 25 | 703081 | 6 |
| PEN | 20 | 253745 | 2 |
| Average | 17.5 | 345556 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.5 hedge funds with bullish positions and the average amount invested in these stocks was $346 million. That figure was $1051 million in UTHR’s case. Pegasystems Inc. (NASDAQ:PEGA) is the most popular stock in this table. On the other hand Semiconductor Manufacturing International Corporation (NYSE:SMI) is the least popular one with only 4 bullish hedge fund positions. United Therapeutics Corporation (NASDAQ:UTHR) 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 1.9% in Q2 through May 30th and outperformed the S&P 500 ETF (SPY) by more than 3 percentage points. Unfortunately UTHR wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on UTHR were disappointed as the stock returned -26.1% 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.
