We can judge whether United Community Banks Inc (NASDAQ:UCBI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.
United Community Banks Inc (NASDAQ:UCBI) shareholders have witnessed an increase in hedge fund sentiment in recent months. Our calculations also showed that UCBI 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.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Noam Gottesman of GLG Partners
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. Let’s go over the key hedge fund action encompassing United Community Banks Inc (NASDAQ:UCBI).
How have hedgies been trading United Community Banks Inc (NASDAQ:UCBI)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 8% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in UCBI over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Renaissance Technologies was the largest shareholder of United Community Banks Inc (NASDAQ:UCBI), with a stake worth $29.1 million reported as of the end of September. Trailing Renaissance Technologies was Elizabeth Park Capital Management, which amassed a stake valued at $7.6 million. D E Shaw, GLG Partners, and Mendon Capital Advisors 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 Elizabeth Park Capital Management allocated the biggest weight to United Community Banks Inc (NASDAQ:UCBI), around 2.99% of its 13F portfolio. Mendon Capital Advisors is also relatively very bullish on the stock, designating 0.33 percent of its 13F equity portfolio to UCBI.
Consequently, specific money managers were leading the bulls’ herd. Weld Capital Management, managed by Minhua Zhang, assembled the most outsized position in United Community Banks Inc (NASDAQ:UCBI). Weld Capital Management had $0.5 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also made a $0.4 million investment in the stock during the quarter. The only other fund with a brand new UCBI position is Joel Greenblatt’s Gotham Asset Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as United Community Banks Inc (NASDAQ:UCBI) but similarly valued. These stocks are CRISPR Therapeutics AG (NASDAQ:CRSP), Fastly, Inc. (NYSE:FSLY), The Hain Celestial Group, Inc. (NASDAQ:HAIN), and TTEC Holdings, Inc. (NASDAQ:TTEC). This group of stocks’ market values resemble UCBI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRSP | 16 | 150251 | 3 |
| FSLY | 16 | 126686 | 3 |
| HAIN | 19 | 545805 | 2 |
| TTEC | 14 | 41238 | -3 |
| Average | 16.25 | 215995 | 1.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 16.25 hedge funds with bullish positions and the average amount invested in these stocks was $216 million. That figure was $51 million in UCBI’s case. The Hain Celestial Group, Inc. (NASDAQ:HAIN) is the most popular stock in this table. On the other hand TTEC Holdings, Inc. (NASDAQ:TTEC) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks United Community Banks Inc (NASDAQ:UCBI) is even less popular than TTEC. 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 UCBI, though not to the same extent, as the stock returned 9.3% during the fourth quarter (through 11/30) and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
