Is Urban Edge Properties (UE) a Good Stock to Buy?

There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze Urban Edge Properties (NYSE:UE) .

Is Urban Edge Properties (NYSE:UE) undervalued? The best stock pickers are actually betting on the stock. The number of bullish hedge fund positions advanced by 3 recently. There were 8 hedge funds in our database with UE positions at the end of September. At the end of this article we will also compare UE to other stocks including PIMCO Dynamic Credit Income Fund (NYSE:PCI), Metals USA Holdings Corp (NYSE:MUSA), and ProAssurance Corporation (NYSE:PRA) to get a better sense of its popularity.

We follow over 700 hedge funds and other institutional investors and by analyzing their quarterly 13F filings, we identify stocks that they are collectively bullish on and develop investment strategies based on this data. One strategy that outperformed the market over the last year involves selecting the 100 best-performing funds and identifying the 30 mid-cap stocks that they are collectively most bullish on. Over the past year, this strategy generated returns of 18%, topping the 8% gain registered by S&P 500 ETFs. We launched this strategy 2.5 years ago and it returned more than 39% since then, vs. 22% gain registered by the S&P 500 ETFs.

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Now, let’s take a look at the key action surrounding Urban Edge Properties (NYSE:UE).

Hedge fund activity in Urban Edge Properties (NYSE:UE)

At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 60% from one quarter earlier. On the other hand, there were a total of 10 hedge funds with a bullish position in UE at the beginning of this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Two Sigma Advisors, led by John Overdeck and David Siegel, holds the biggest position in Urban Edge Properties (NYSE:UE). Two Sigma Advisors has a $6.2 million position in the stock, comprising less than 0.1% of its 13F portfolio. Sitting at the No. 2 spot is Cliff Asness of AQR Capital Management, with a $5.7 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism include Andre F. Perold’s HighVista Strategies. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As aggregate interest increased, some big names have been driving this bullishness. Tudor Investment Corp, led by Paul Tudor Jones, established the largest position in Urban Edge Properties (NYSE:UE). Tudor Investment Corp had $0.5 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also made a $0.5 million investment in the stock during the quarter. The only other fund with a brand new UE position is Millennium Management, one of the 10 largest hedge funds in the world.

Let’s also examine hedge fund activity in other stocks similar to Urban Edge Properties (NYSE:UE). We will take a look at PIMCO Dynamic Credit Income Fund (NYSE:PCI), Metals USA Holdings Corp (NYSE:MUSA), ProAssurance Corporation (NYSE:PRA), and NorthWestern Corp (NYSE:NWE). This group of stocks’ market caps are closest to UE’s market cap.

As you can see these stocks had an average of 10.25 hedge funds with bullish positions and the average amount invested in these stocks was $76 million. That figure was $15 million in UE’s case. Metals USA Holdings Corp (NYSE:MUSA) is the most popular stock in this table. On the other hand PIMCO Dynamic Credit Income Fund (NYSE:PCI) is the least popular one with only 3 bullish hedge fund positions. Urban Edge Properties (NYSE:UE) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MUSA might be a better candidate to consider taking a long position in.

Disclosure: None