We at Insider Monkey have gone over 700 13F filings that hedge funds and prominent investors are required to file by the government. The 13F filings show the funds’ and investors’ portfolio positions as of September 30. In this article we look at what those investors think of Domtar Corp (USA) (NYSE:UFS).
Is Domtar Corp (USA) (NYSE:UFS) a buy, sell, or hold? Domtar shares haven’t gone anywhere over the last 2 years but fortunately for the investors the company boosted its quarterly dividend by more than 45%. The stock currently yields close to 4% and this may entice some hedge funds into the stock. Our calculations show that this is indeed the case. The number of long hedge fund positions advanced by 2 during the third quarter. At the end of this article we will also compare UFS to other stocks including Covanta Holding Corporation (NYSE:CVA), First Industrial Realty Trust, Inc. (NYSE:FR), and Heartland Payment Systems, Inc. (NYSE:HPY) to get a better sense of its popularity.
Follow Domtar Corp (NYSE:UFS)
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Why do we care about hedge fund sentiment before even considering a stock for our portfolios? To the average investor there are plenty of gauges investors have at their disposal to analyze stocks. A duo of the most underrated gauges are hedge fund and insider trading activity. Our research have shown that, historically, those who follow the best picks of the best money managers can trounce the market by a significant amount (see the details here).
Keeping this in mind, we’re going to take a look at the recent action regarding Domtar Corp (USA) (NYSE:UFS).
Hedge fund activity in Domtar Corp (USA) (NYSE:UFS)
Heading into Q4, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 11% from the second quarter. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Point72 Asset Management, managed by Steve Cohen, holds the number one position in Domtar Corp (USA) (NYSE:UFS). Point72 Asset Management has a $41.9 million position in the stock, comprising 0.3% of its 13F portfolio. Sitting at the No. 2 spot is Kevin Michael Ulrich and Anthony Davis of Anchorage Advisors, with a $21.5 million position; 0.7% of its 13F portfolio is allocated to the company. Remaining members of the smart money that hold long positions contain Chuck Royce’s Royce & Associates, Cliff Asness’s AQR Capital Management and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Consequently, key hedge funds were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in Domtar Corp (USA) (NYSE:UFS). Marshall Wace LLP had $6.8 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also made a $5.3 million investment in the stock during the quarter. The following funds were also among the new UFS investors: Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, Alec Litowitz and Ross Laser’s Magnetar Capital, and Ray Dalio’s Bridgewater Associates.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Domtar Corp (USA) (NYSE:UFS) but similarly valued. We will take a look at Covanta Holding Corporation (NYSE:CVA), First Industrial Realty Trust, Inc. (NYSE:FR), Heartland Payment Systems, Inc. (NYSE:HPY), and Grupo Financiero Galicia S.A. (ADR) (NASDAQ:GGAL). This group of stocks’ market values resemble UFS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CVA | 19 | 364515 | 0 |
| FR | 16 | 249996 | 1 |
| HPY | 13 | 200871 | -1 |
| GGAL | 12 | 73515 | -2 |
As you can see these stocks had an average of 15 hedge funds with bullish positions and the average amount invested in these stocks was $222 million. That figure was $112 million in UFS’s case. Covanta Holding Corporation (NYSE:CVA) is the most popular stock in this table. On the other hand Grupo Financiero Galicia S.A. (ADR) (NASDAQ:GGAL) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks Domtar Corp (USA) (NYSE:UFS) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
