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 September 30, so let’s proceed with the discussion of the hedge fund sentiment on Compania Cervecerias Unidas S.A. (ADR) (NYSE:CCU).
The hedge fund interest towards Compania Cervecerias Unidas S.A. (ADR) (NYSE:CCU) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Eagle Materials, Inc. (NYSE:EXP), Investors Bancorp, Inc. (NASDAQ:ISBC), and VWR Corp (NASDAQ:VWR) to gather more data points.
Follow Compania Cervecerias Unidas S A (NYSE:CCU)
Follow Compania Cervecerias Unidas S A (NYSE:CCU)
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
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With all of this in mind, let’s view the recent action regarding Compania Cervecerias Unidas S.A. (ADR) (NYSE:CCU).
How have hedgies been trading Compania Cervecerias Unidas S.A. (ADR) (NYSE:CCU)?
Heading into the fourth quarter of 2016, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, unchanged over the quarter. Below, you can check out the change in hedge fund sentiment towards CCU over the last five quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).
Of the funds tracked by Insider Monkey, William Duhamel’s Route One Investment Company has the largest position in Compania Cervecerias Unidas S.A. (ADR) (NYSE:CCU), worth close to $16 million, accounting for 0.7% of its total 13F portfolio. The second largest stake is held by Renaissance Technologies, one of the largest hedge funds in the world, which reported a $10.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Some other members of the smart money that are bullish comprise Cliff Asness’ AQR Capital Management, Chuck Royce’s Royce & Associates, and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Judging by the fact that Compania Cervecerias Unidas S.A. (ADR) (NYSE:CCU) has encountered bearish sentiment from the entirety of the hedge funds we track, it’s easy to see that there were a few money managers that decided to sell off their entire stakes during the third quarter. At the top of the heap, First Eagle Investment Management sold off the biggest stake of all the hedgies watched by Insider Monkey, comprising close to $115.9 million in stock. Ram Seshan Venkateswaran’s fund, Vernier Capital, also cut its stock, about $6.1 million worth.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Compania Cervecerias Unidas S.A. (ADR) (NYSE:CCU) but similarly valued. We will take a look at Eagle Materials, Inc. (NYSE:EXP), Investors Bancorp, Inc. (NASDAQ:ISBC), VWR Corp (NASDAQ:VWR), and AMC Networks Inc (NASDAQ:AMCX). This group of stocks’ market valuations are closest to CCU’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EXP | 29 | 477022 | 0 |
| ISBC | 23 | 610037 | -1 |
| VWR | 26 | 288144 | 5 |
| AMCX | 28 | 344024 | 4 |
As you can see these stocks had an average of 27 funds with bullish positions and the average amount invested in these stocks was $430 million. That figure was just $53 million in CCU’s case. Eagle Materials, Inc. (NYSE:EXP) is the most popular stock in this table. On the other hand Investors Bancorp, Inc. (NASDAQ:ISBC) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Compania Cervecerias Unidas S.A. (ADR) (NYSE:CCU) is even less popular than Investors Bancorp, Inc. (NASDAQ:ISBC). Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
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