Is Union Pacific Corporation (UNP) Going to Burn These Hedge Funds?

Union Pacific Corporation (NYSE:UNP) is up a little over 23% in 2013, and the rail company’s operation in the tracking shipment space have been largely responsible for Mr. Market’s bullishness. So, is it time to take profits, or is there more appreciation in store?

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Just as useful, positive insider trading sentiment is another way to look at the stock market universe. Just as you’d expect, there are lots of stimuli for an upper level exec to get rid of shares of his or her company, but only one, very clear reason why they would initiate a purchase. Plenty of academic studies have demonstrated the valuable potential of this method if investors understand what to do (learn more here).

Thus, we’re going to examine the newest info surrounding Union Pacific Corporation (NYSE:UNP).

What does the smart money think about Union Pacific Corporation (NYSE:UNP)?

At Q2’s end, a total of 42 of the hedge funds we track were long in this stock, a change of -2% from the previous quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were upping their holdings substantially.

According to our 13F database, Harris Associates, managed by Natixis Global Asset Management, holds the largest position in Union Pacific Corporation (NYSE:UNP). Harris Associates has a $182.5 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Donald Chiboucis of Columbus Circle Investors, with a $161.6 million position; 1.3% of its 13F portfolio is allocated to the stock. Other hedgies that hold long positions include Alan Fournier’s Pennant Capital Management, D. E. Shaw’s D E Shaw and Phill Gross and Robert Atchinson’s Adage Capital Management.

As Union Pacific Corporation (NYSE:UNP) has experienced declining interest from upper-tier hedge fund managers, it’s easy to see that there exists a select few hedgies that elected to cut their entire stakes last quarter. Interestingly, Jim Simons’s Renaissance Technologies sold off the largest stake of all the hedgies we watch, totaling an estimated $41.7 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also dumped its stock, about $33 million worth. These transactions are intriguing to say the least, as total hedge fund interest dropped by 1 funds last quarter.

What have insiders been doing with Union Pacific Corporation (NYSE:UNP)?

Legal insider trading, particularly when it’s bullish, is most useful when the company we’re looking at has experienced transactions within the past 180 days. Over the last half-year time frame, Union Pacific Corporation (NYSE:UNP) has experienced zero unique insiders buying, and 7 insider sales (see the details of insider trades here).

We’ll also take a look at the relationship between both of these indicators in other stocks similar to Union Pacific Corporation (NYSE:UNP). These stocks are Kansas City Southern (NYSE:KSU), Canadian Pacific Railway Limited (USA) (NYSE:CP), CSX Corporation (NYSE:CSX), Norfolk Southern Corp. (NYSE:NSC), and Canadian National Railway (USA) (NYSE:CNI). This group of stocks belong to the railroads industry and their market caps resemble UNP’s market cap.

Using the results explained by the previously mentioned strategies, regular investors should always pay attention to hedge fund and insider trading sentiment, and Union Pacific Corporation (NYSE:UNP) shareholders fit into this picture quite nicely.

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