In this article we will take a look at whether hedge funds think Uber Technologies, Inc. (NYSE:UBER) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is UBER stock a buy or sell? Uber Technologies, Inc. (NYSE:UBER) was in 135 hedge funds’ portfolios at the end of December. The all time high for this statistic was previously 97. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. UBER has seen an increase in support from the world’s most elite money managers lately. There were 100 hedge funds in our database with UBER positions at the end of the third quarter. Our calculations also showed that UBER ranked 12th among the 30 most popular stocks among hedge funds (click for Q4 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 124 percentage points since March 2017 (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 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Brad Gerstner of Altimeter Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage (or at the end of this article). Keeping this in mind let’s take a glance at the latest hedge fund action encompassing Uber Technologies, Inc. (NYSE:UBER).
Do Hedge Funds Think UBER Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 135 of the hedge funds tracked by Insider Monkey were long this stock, a change of 35% from the third quarter of 2020. The graph below displays the number of hedge funds with bullish position in UBER over the last 22 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to Insider Monkey’s hedge fund database, Altimeter Capital Management, managed by Brad Gerstner, holds the most valuable position in Uber Technologies, Inc. (NYSE:UBER). Altimeter Capital Management has a $1.449 billion position in the stock, comprising 13.4% of its 13F portfolio. The second most bullish fund manager is Tiger Global Management LLC, managed by Chase Coleman, which holds a $1.4118 billion position; the fund has 3.6% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism consist of Philippe Laffont’s Coatue Management, Lei Zhang’s Hillhouse Capital Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Tao Capital allocated the biggest weight to Uber Technologies, Inc. (NYSE:UBER), around 26.37% of its 13F portfolio. Marathon Partners is also relatively very bullish on the stock, earmarking 19.04 percent of its 13F equity portfolio to UBER.
As industrywide interest jumped, some big names were leading the bulls’ herd. Whale Rock Capital Management, managed by Alex Sacerdote, assembled the biggest position in Uber Technologies, Inc. (NYSE:UBER). Whale Rock Capital Management had $341.5 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $201 million investment in the stock during the quarter. The following funds were also among the new UBER investors: Brandon Haley’s Holocene Advisors, Ryan Frick and Oliver Evans’s Dorsal Capital Management, and Robert Boucai’s Newbrook Capital Advisors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Uber Technologies, Inc. (NYSE:UBER) but similarly valued. We will take a look at The Sherwin-Williams Company (NYSE:SHW), Activision Blizzard, Inc. (NASDAQ:ATVI), Cigna Corporation (NYSE:CI), Illinois Tool Works Inc. (NYSE:ITW), NetEase, Inc (NASDAQ:NTES), VMware, Inc. (NYSE:VMW), and CME Group Inc (NASDAQ:CME). All of these stocks’ market caps are similar to UBER’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHW | 49 | 1881345 | -6 |
| ATVI | 81 | 3739018 | -12 |
| CI | 57 | 2578300 | -5 |
| ITW | 40 | 704116 | 1 |
| NTES | 38 | 3467820 | -7 |
| VMW | 35 | 405815 | 4 |
| CME | 58 | 2275518 | -1 |
| Average | 51.1 | 2150276 | -3.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 51.1 hedge funds with bullish positions and the average amount invested in these stocks was $2150 million. That figure was $10094 million in UBER’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand VMware, Inc. (NYSE:VMW) is the least popular one with only 35 bullish hedge fund positions. Compared to these stocks Uber Technologies, Inc. (NYSE:UBER) is more popular among hedge funds. Our overall hedge fund sentiment score for UBER is 94.5. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 7% in 2021 through March 12th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on UBER as the stock returned 18.3% since the end of December (through 3/12) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
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Disclosure: None. This article was originally published at Insider Monkey.
