Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Unilever plc (ADR) (NYSE:UL).
Unilever plc (ADR) (NYSE:UL) investors should pay attention to a decrease in enthusiasm from smart money in recent months. UL was in 10 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with UL positions at the end of the previous quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Unilever N.V. (ADR) (NYSE:UN), Citigroup Inc. (NYSE:C), and UnitedHealth Group Inc. (NYSE:UNH) to gather more data points.
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What does the smart money think about Unilever plc (ADR) (NYSE:UL)?
At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 23% from one quarter earlier. On the other hand, there were a total of 11 hedge funds with a bullish position in UL at the beginning of this year. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital has the number one position in Unilever plc (ADR) (NYSE:UL), worth close to $96.3 million. Coming in second is Tom Gayner of Markel Gayner Asset Management which holds a $72.4 million position; 1.9% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions contain Mario Gabelli’s GAMCO Investors, Scott Wallace’s Wallace Capital Management and J. Alan Reid, Jr.’s Forward Management. We should note that Forward Management is 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.
Judging by the fact that Unilever plc (ADR) (NYSE:UL) has weathered a decline in interest from the smart money, we can see that there lies a certain “tier” of money managers who were dropping their full holdings by the end of the third quarter. Interestingly, Noam Gottesman’s GLG Partners cut the biggest position of all the hedgies monitored by Insider Monkey, comprising an estimated $1.8 million in stock. Ken Griffin’s fund, Citadel Investment Group, also cut its call options, about $1.7 million worth.
Let’s check out hedge fund activity in other stocks similar to Unilever plc (ADR) (NYSE:UL). These stocks are Unilever N.V. (ADR) (NYSE:UN), Citigroup Inc. (NYSE:C), UnitedHealth Group Inc. (NYSE:UNH), and Amgen, Inc. (NASDAQ:AMGN). This group of stocks’ market caps resemble UL’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| UN | 11 | 953634 | 0 |
| C | 97 | 8707804 | 0 |
| UNH | 52 | 2703217 | -3 |
| AMGN | 59 | 1863803 | 1 |
As you can see these stocks had an average of 55 hedge funds with bullish positions and the average amount invested in these stocks was $3.56 billion. That figure was $191 million in UL’s case. Citigroup Inc. (NYSE:C) is the most popular stock in this table. On the other hand Unilever N.V. (ADR) (NYSE:UN) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Unilever plc (ADR) (NYSE:UL) is even less popular than UN. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
Disclosure: None
