How do we determine whether UBS Group AG (NYSE:UBS) makes for a good investment at the moment? We analyze the sentiment of a select group of the very best investors in the world, who spend immense amounts of time and resources studying companies. They may not always be right (no one is), but data shows that their consensus long positions have historically outperformed the market when we adjust for known risk factors.
UBS Group AG (NYSE:UBS) was in 16 hedge funds’ portfolios at the end of the third quarter of 2019. UBS investors should pay attention to an increase in hedge fund sentiment in recent months. There were 14 hedge funds in our database with UBS positions at the end of the previous quarter. Our calculations also showed that UBS isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 91% since May 2014 and outperformed the Russell 2000 ETFs by nearly 40 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the recent hedge fund action encompassing UBS Group AG (NYSE:UBS).
What does smart money think about UBS Group AG (NYSE:UBS)?
Heading into the fourth quarter of 2019, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 14% from the second quarter of 2019. By comparison, 14 hedge funds held shares or bullish call options in UBS a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
More specifically, Fisher Asset Management was the largest shareholder of UBS Group AG (NYSE:UBS), with a stake worth $593.7 million reported as of the end of September. Trailing Fisher Asset Management was Renaissance Technologies, which amassed a stake valued at $105.8 million. Pzena Investment Management, Marshall Wace, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Stamos Capital allocated the biggest weight to UBS Group AG (NYSE:UBS), around 1.19% of its 13F portfolio. Fisher Asset Management is also relatively very bullish on the stock, designating 0.65 percent of its 13F equity portfolio to UBS.
Consequently, key money managers were breaking ground themselves. Two Sigma Advisors, managed by John Overdeck and David Siegel, established the biggest position in UBS Group AG (NYSE:UBS). Two Sigma Advisors had $1.2 million invested in the company at the end of the quarter. Minhua Zhang’s Weld Capital Management also made a $0.2 million investment in the stock during the quarter. The only other fund with a brand new UBS position is Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks similar to UBS Group AG (NYSE:UBS). These stocks are Orange (NYSE:ORAN), Analog Devices, Inc. (NASDAQ:ADI), JD.Com Inc (NASDAQ:JD), and Emerson Electric Co. (NYSE:EMR). This group of stocks’ market values are similar to UBS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ORAN | 3 | 2104 | 1 |
| ADI | 43 | 2517774 | -1 |
| JD | 54 | 5279009 | 9 |
| EMR | 37 | 594019 | 5 |
| Average | 34.25 | 2098227 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 34.25 hedge funds with bullish positions and the average amount invested in these stocks was $2098 million. That figure was $817 million in UBS’s case. JD.Com Inc (NASDAQ:JD) is the most popular stock in this table. On the other hand Orange (NYSE:ORAN) is the least popular one with only 3 bullish hedge fund positions. UBS Group AG (NYSE:UBS) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on UBS, though not to the same extent, as the stock returned 7.4% during the first two months of the fourth quarter and outperformed the market.
Disclosure: None. This article was originally published at Insider Monkey.
