Will the new coronavirus cause a recession in US in the next 6 months? On February 27th, we put the probability at 75% and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Unilever plc (NYSE:UL).
Unilever plc (NYSE:UL) investors should be aware of an increase in hedge fund sentiment of late. UL was in 17 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 15 hedge funds in our database with UL positions at the end of the previous quarter. Our calculations also showed that UL isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video below for Q3 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most traders, hedge funds are viewed as unimportant, outdated financial vehicles of years past. While there are over 8000 funds trading at the moment, Our experts choose to focus on the crème de la crème of this group, around 850 funds. These hedge fund managers oversee most of the hedge fund industry’s total capital, and by following their best equity investments, Insider Monkey has come up with various investment strategies that have historically surpassed the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points per year since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Tom Gayner of Markel Gayner Asset Management
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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. In January, we recommended a long position in one of the most shorted stocks in the market, and that stock returned more than 50% despite the large losses in the market since our recommendation. Now let’s take a glance at the fresh hedge fund action encompassing Unilever plc (NYSE:UL).
What have hedge funds been doing with Unilever plc (NYSE:UL)?
Heading into the first quarter of 2020, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from one quarter earlier. On the other hand, there were a total of 13 hedge funds with a bullish position in UL a year ago. With hedgies’ sentiment swirling, there exists a few key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).
The largest stake in Unilever plc (NYSE:UL) was held by Arrowstreet Capital, which reported holding $114 million worth of stock at the end of September. It was followed by Markel Gayner Asset Management with a $87.3 million position. Other investors bullish on the company included Pittencrieff Partners – Gabalex Capital, Citadel Investment Group, and Wallace Capital 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 5.62% of its 13F portfolio. Lucas Capital Management is also relatively very bullish on the stock, setting aside 2.19 percent of its 13F equity portfolio to UL.
As industrywide interest jumped, some big names were breaking ground themselves. D E Shaw, managed by D. E. Shaw, assembled the biggest position in Unilever plc (NYSE:UL). D E Shaw had $0.8 million invested in the company at the end of the quarter. Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors also made a $0.3 million investment in the stock during the quarter. The other funds with brand new UL positions are Israel Englander’s Millennium Management and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Unilever plc (NYSE:UL) but similarly valued. These stocks are McDonald’s Corporation (NYSE:MCD), PetroChina Company Limited (NYSE:PTR), salesforce.com, inc. (NYSE:CRM), and NVIDIA Corporation (NASDAQ:NVDA). This group of stocks’ market values are similar to UL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MCD | 57 | 1633049 | 5 |
| PTR | 13 | 94057 | 0 |
| CRM | 112 | 9798571 | 3 |
| NVDA | 79 | 3179400 | 23 |
| Average | 65.25 | 3676269 | 7.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 65.25 hedge funds with bullish positions and the average amount invested in these stocks was $3676 million. That figure was $248 million in UL’s case. salesforce.com, inc. (NYSE:CRM) is the most popular stock in this table. On the other hand PetroChina Company Limited (NYSE:PTR) is the least popular one with only 13 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 calculations showed that top 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 11.7% in 2020 through March 11th but still beat the market by 3.1 percentage points. A small number of hedge funds were also right about betting on UL as the stock returned -7.5% during the same time period and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
