In this article you are going to find out whether hedge funds think United Parcel Service, Inc. (NYSE:UPS) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.
Is United Parcel Service, Inc. (NYSE:UPS) ready to rally soon? The smart money was getting less optimistic. The number of long hedge fund bets were trimmed by 4 recently. United Parcel Service, Inc. (NYSE:UPS) was in 44 hedge funds’ portfolios at the end of March. The all time high for this statistic is 57. Our calculations also showed that UPS isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings). There were 48 hedge funds in our database with UPS holdings at the end of December.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Phillip Gross of Adage Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 homepage. With all of this in mind let’s take a peek at the latest hedge fund action surrounding United Parcel Service, Inc. (NYSE:UPS).
Do Hedge Funds Think UPS Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 44 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UPS over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Bill & Melinda Gates Foundation Trust was the largest shareholder of United Parcel Service, Inc. (NYSE:UPS), with a stake worth $476.3 million reported as of the end of March. Trailing Bill & Melinda Gates Foundation Trust was Citadel Investment Group, which amassed a stake valued at $283.1 million. Masters Capital Management, Adage Capital Management, and Two Sigma 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 Masters Capital Management allocated the biggest weight to United Parcel Service, Inc. (NYSE:UPS), around 5.67% of its 13F portfolio. Bronson Point Partners is also relatively very bullish on the stock, earmarking 2.89 percent of its 13F equity portfolio to UPS.
Judging by the fact that United Parcel Service, Inc. (NYSE:UPS) has faced falling interest from hedge fund managers, logic holds that there were a few hedgies that decided to sell off their entire stakes last quarter. At the top of the heap, Peter Avellone’s Cartenna Capital dumped the largest investment of the “upper crust” of funds followed by Insider Monkey, worth about $8.8 million in stock, and Ed Bosek’s BeaconLight Capital was right behind this move, as the fund said goodbye to about $5.7 million worth. These moves are important to note, as total hedge fund interest fell by 4 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to United Parcel Service, Inc. (NYSE:UPS). These stocks are Union Pacific Corporation (NYSE:UNP), The Unilever Group (NYSE:UL), Linde plc (NYSE:LIN), BHP Group (NYSE:BBL), Morgan Stanley (NYSE:MS), SAP SE (NYSE:SAP), and Amgen, Inc. (NASDAQ:AMGN). This group of stocks’ market caps are closest to UPS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UNP | 75 | 4685045 | 7 |
| UL | 20 | 826829 | -5 |
| LIN | 43 | 4636270 | -7 |
| BBL | 23 | 1353821 | 5 |
| MS | 79 | 5285168 | 13 |
| SAP | 19 | 1473996 | 5 |
| AMGN | 47 | 1001957 | -2 |
| Average | 43.7 | 2751869 | 2.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 43.7 hedge funds with bullish positions and the average amount invested in these stocks was $2752 million. That figure was $1347 million in UPS’s case. Morgan Stanley (NYSE:MS) is the most popular stock in this table. On the other hand SAP SE (NYSE:SAP) is the least popular one with only 19 bullish hedge fund positions. United Parcel Service, Inc. (NYSE:UPS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UPS is 45. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on UPS as the stock returned 16.9% since the end of Q1 (through 6/18) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.
