Is UL Stock A Buy or Sell?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Unilever PLC (NYSE:UL).

Is UL stock a buy? Unilever PLC (NYSE:UL) shareholders have witnessed an increase in hedge fund interest of late. Unilever PLC  (NYSE:UL) was in 25 hedge funds’ portfolios at the end of December. The all time high for this statistic is 18. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that UL isn’t 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).

Rajiv Jain of GQG Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the CBD market is growing at a 33% annualized rate, so we are taking a closer look at this under-the-radar hemp stock. We go through lists like the 10 best biotech stocks under $10 to identify the next stock with 10x upside potential. 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 website. Now let’s take a look at the fresh hedge fund action regarding Unilever PLC (NYSE:UL).

Do Hedge Funds Think UL Is A Good Stock To Buy Now?

At the end of the fourth quarter, a total of 25 of the hedge funds tracked by Insider Monkey were long this stock, a change of 92% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UL over the last 22 quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Tom Russo’s Gardner Russo & Gardner has the most valuable position in Unilever PLC (NYSE:UL), worth close to $673.4 million, corresponding to 6.1% of its total 13F portfolio. On Gardner Russo & Gardner’s heels is Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, which holds a $270.2 million position; 0.4% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors with similar optimism contain Israel Englander’s Millennium Management, Renaissance Technologies and Ken Fisher’s Fisher Asset Management. In terms of the portfolio weights assigned to each position Pittencrieff Partners – Gabalex Capital allocated the biggest weight to Unilever PLC (NYSE:UL), around 6.15% of its 13F portfolio. Gardner Russo & Gardner is also relatively very bullish on the stock, setting aside 6.11 percent of its 13F equity portfolio to UL.

Consequently, key money managers have jumped into Unilever PLC (NYSE:UL) headfirst. Gardner Russo & Gardner, managed by Tom Russo, created the most outsized position in Unilever PLC (NYSE:UL). Gardner Russo & Gardner had $673.4 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $40.4 million position during the quarter. The following funds were also among the new UL investors: Ken Fisher’s Fisher Asset Management, D. E. Shaw’s D E Shaw, and Rajiv Jain’s GQG Partners.

Let’s now take a look at hedge fund activity in other stocks similar to Unilever PLC (NYSE:UL). These stocks are Danaher Corporation (NYSE:DHR), Medtronic plc (NYSE:MDT), SAP SE (NYSE:SAP), NextEra Energy, Inc. (NYSE:NEE), Texas Instruments Incorporated (NASDAQ:TXN), Honeywell International Inc. (NYSE:HON), and United Parcel Service, Inc. (NYSE:UPS). This group of stocks’ market valuations are closest to UL’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 52 hedge funds with bullish positions and the average amount invested in these stocks was $2485 million. That figure was $1173 million in UL’s case. Danaher Corporation (NYSE:DHR) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 14 bullish hedge fund positions. Unilever PLC (NYSE:UL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UL is 48.2. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 12.3% in 2021 through April 19th and surpassed the market again by 0.9 percentage points. Unfortunately UL wasn’t nearly as popular as these 30 stocks (hedge fund sentiment was quite bearish); UL investors were disappointed as the stock returned -3.5% since the end of December (through 4/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

Disclosure: None. This article was originally published at Insider Monkey.