In this article we will take a look at whether hedge funds think UWM Holdings Corporation (NYSE:UWMC) is a good investment right now. We check hedge fund and billionaire investor sentiment before delving into hours of research. Hedge funds spend millions of dollars on Ivy League graduates, unconventional data sources, expert networks, and get tips from investment bankers and industry insiders. Sure they sometimes fail miserably, but their consensus stock picks historically outperformed the market after adjusting for known risk factors.
Is UWMC a good stock to buy? UWM Holdings Corporation (NYSE:UWMC) has seen an increase in hedge fund sentiment recently. UWM Holdings Corporation (NYSE:UWMC) was in 20 hedge funds’ portfolios at the end of the second quarter of 2021. The all time high for this statistic is 19. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 19 hedge funds in our database with UWMC positions at the end of the first quarter. Our calculations also showed that UWMC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).
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 185.4% since March 2017 and outperformed the S&P 500 ETFs by more than 79 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
David Einhorn of Greenlight Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, plant based food market is expected to explode 100-fold by 2050, so we are checking out this under-the-radar stock. We go through lists like the 10 best growth stocks to buy to pick the next Tesla that will deliver a 10x return. 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. Now we’re going to take a gander at the key hedge fund action encompassing UWM Holdings Corporation (NYSE:UWMC).
Do Hedge Funds Think UWMC Is A Good Stock To Buy Now?
Heading into the third quarter of 2021, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UWMC over the last 24 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Brian J. Higgins’s King Street Capital has the largest position in UWM Holdings Corporation (NYSE:UWMC), worth close to $37.3 million, amounting to 3.1% of its total 13F portfolio. The second largest stake is held by Matthew Lindenbaum of Basswood Capital, with a $8.8 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Some other peers that hold long positions consist of Ken Griffin’s Citadel Investment Group, David Einhorn’s Greenlight Capital and Paul Marshall and Ian Wace’s Marshall Wace LLP. In terms of the portfolio weights assigned to each position King Street Capital allocated the biggest weight to UWM Holdings Corporation (NYSE:UWMC), around 3.06% of its 13F portfolio. Basswood Capital is also relatively very bullish on the stock, setting aside 0.37 percent of its 13F equity portfolio to UWMC.
As one would reasonably expect, key hedge funds have jumped into UWM Holdings Corporation Class (NYSE:UWMC) headfirst. Greenlight Capital, managed by David Einhorn, created the most outsized position in UWM Holdings Corporation (NYSE:UWMC). Greenlight Capital had $4.1 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also initiated a $4 million position during the quarter. The following funds were also among the new UWMC investors: Daniel S. Och’s OZ Management, Paul Tudor Jones’s Tudor Investment Corp, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as UWM Holdings Corporation (NYSE:UWMC) but similarly valued. We will take a look at Equity Lifestyle Properties, Inc. (NYSE:ELS), Advance Auto Parts, Inc. (NYSE:AAP), W.P. Carey Inc. (NYSE:WPC), Mohawk Industries, Inc. (NYSE:MHK), Elastic N.V. (NYSE:ESTC), Masimo Corporation (NASDAQ:MASI), and CBOE Global Markets Inc (NASDAQ:CBOE). This group of stocks’ market valuations are closest to UWMC’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ELS | 25 | 477660 | -4 |
| AAP | 34 | 849879 | -9 |
| WPC | 29 | 147455 | 6 |
| MHK | 44 | 1311640 | 8 |
| ESTC | 55 | 3062021 | 3 |
| MASI | 28 | 317268 | -7 |
| CBOE | 31 | 826143 | -2 |
| Average | 35.1 | 998867 | -0.7 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 35.1 hedge funds with bullish positions and the average amount invested in these stocks was $999 million. That figure was $67 million in UWMC’s case. Elastic N.V. (NYSE:ESTC) is the most popular stock in this table. On the other hand Equity Lifestyle Properties, Inc. (NYSE:ELS) is the least popular one with only 25 bullish hedge fund positions. Compared to these stocks UWM Holdings Corporation (NYSE:UWMC) is even less popular than ELS. Our overall hedge fund sentiment score for UWMC is 36. 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. Hedge funds dodged a bullet by taking a bearish stance towards UWMC. Our calculations showed that the top 5 most popular hedge fund stocks returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd but managed to beat the market again by 1.6 percentage points. Unfortunately UWMC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was very bearish); UWMC investors were disappointed as the stock returned -16.2% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
