“Value has performed relatively poorly since the 2017 shift, but we believe challenges to the S&P 500’s dominance are mounting and resulting active opportunities away from the index are growing. At some point, this fault line will break, likely on the back of rising rates, and all investors will be reminded that the best time to diversify away from the winners is when it is most painful. The bargain of capturing long-term value may be short-term pain, but enough is eventually enough and it comes time to harvest the benefits.,” said Clearbridge Investments in its market commentary. We aren’t sure whether long-term interest rates will top 5% and value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. That’s why we believe it would be worthwhile to take a look at the hedge fund sentiment on UniFirst Corp (NYSE:UNF) in order to identify whether reputable and successful top money managers continue to believe in its potential.
Is UniFirst Corp (NYSE:UNF) worth your attention right now? Investors who are in the know are becoming less confident. The number of long hedge fund positions were trimmed by 2 recently. Our calculations also showed that UNF isn’t among the 30 most popular stocks among hedge funds. UNF was in 14 hedge funds’ portfolios at the end of December. There were 16 hedge funds in our database with UNF holdings at the end of the previous quarter.
In the financial world there are several tools stock traders can use to appraise publicly traded companies. Some of the less utilized tools are hedge fund and insider trading sentiment. Our researchers have shown that, historically, those who follow the best picks of the best fund managers can beat the S&P 500 by a superb margin (see the details here).
We’re going to take a gander at the key hedge fund action regarding UniFirst Corp (NYSE:UNF).
Hedge fund activity in UniFirst Corp (NYSE:UNF)
At the end of the fourth quarter, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of -13% from one quarter earlier. By comparison, 15 hedge funds held shares or bullish call options in UNF a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in UniFirst Corp (NYSE:UNF) was held by Royce & Associates, which reported holding $84.6 million worth of stock at the end of September. It was followed by Renaissance Technologies with a $29.8 million position. Other investors bullish on the company included Echo Street Capital Management, AQR Capital Management, and GLG Partners.
Due to the fact that UniFirst Corp (NYSE:UNF) has experienced bearish sentiment from hedge fund managers, it’s easy to see that there were a few funds who sold off their entire stakes in the third quarter. Interestingly, William Hyatt’s Hudson Way Capital Management cut the biggest stake of the 700 funds followed by Insider Monkey, comprising close to $7.4 million in stock, and Ken Griffin’s Citadel Investment Group was right behind this move, as the fund dumped about $3.4 million worth. These transactions are interesting, as aggregate hedge fund interest dropped by 2 funds in the third quarter.
Let’s now review hedge fund activity in other stocks similar to UniFirst Corp (NYSE:UNF). These stocks are Cabot Microelectronics Corporation (NASDAQ:CCMP), Allegheny Technologies Incorporated (NYSE:ATI), Owens-Illinois Inc (NYSE:OI), and CommVault Systems, Inc. (NASDAQ:CVLT). All of these stocks’ market caps resemble UNF’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CCMP | 20 | 280850 | 1 |
| ATI | 24 | 270622 | -3 |
| OI | 21 | 350797 | 4 |
| CVLT | 23 | 359636 | 1 |
| Average | 22 | 315476 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 22 hedge funds with bullish positions and the average amount invested in these stocks was $315 million. That figure was $153 million in UNF’s case. Allegheny Technologies Incorporated (NYSE:ATI) is the most popular stock in this table. On the other hand Cabot Microelectronics Corporation (NASDAQ:CCMP) is the least popular one with only 20 bullish hedge fund positions. Compared to these stocks UniFirst Corp (NYSE:UNF) is even less popular than CCMP. Hedge funds dodged a bullet by taking a bearish stance towards UNF. Our calculations showed that the top 15 most popular hedge fund stocks returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately UNF wasn’t nearly as popular as these 15 stock (hedge fund sentiment was very bearish); UNF investors were disappointed as the stock returned 7% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
