Should You Buy Ultrapar Participacoes SA (ADR) (UGP)?

Judging by the fact that Ultrapar Participacoes SA (ADR) (NYSE:UGP) has witnessed a declination in interest from the entirety of the hedge funds we track, we can see that there lies a certain “tier” of hedgies that decided to sell off their full holdings last quarter. Interestingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the biggest stake of the 700 funds tracked by Insider Monkey, valued at about $2.3 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also said goodbye to its stock, about $0.4 million worth. These bearish behaviors are interesting, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Ultrapar Participacoes SA (ADR) (NYSE:UGP) but similarly valued. These stocks are Microchip Technology Inc. (NASDAQ:MCHP), Delhaize Group (ADR) (NYSE:DEG), Tripadvisor Inc (NASDAQ:TRIP), and Harris Corporation (NYSE:HRS). This group of stocks’ market values match UGP’s market value.

As you can see these stocks had an average of 27.75 hedge funds with bullish positions and the average amount invested in these stocks was $517 million. That figure was $84 million in UGP’s case. Tripadvisor Inc (NASDAQ:TRIP) is the most popular stock in this table. On the other hand Delhaize Group (ADR) (NYSE:DEG) is the least popular one with only 5 bullish hedge fund positions. Ultrapar Participacoes SA (ADR) (NYSE:UGP) 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 TRIP might be a better candidate to consider a long position.