Should You Buy Umpqua Holdings Corp (UMPQ)?

Concerns over a shift in Fed’s easy monetary policy have hit several hedge funds hard during the third quarter. A number of sectors are in correction territory. More importantly, Russell 2000 ETF (IWM) underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25, 2015 and October 30, 2015. Hedge funds and institutional investors tracked by Insider Monkey usually invest a disproportionate amount of their portfolios in smaller cap stocks. We have been receiving indications that hedge funds were paring back their overall exposure and this is one of the factors behind the recent movements in major indices. In this article, we will take a closer look at hedge fund sentiment towards Umpqua Holdings Corp (NASDAQ:UMPQ).

Is Umpqua Holdings Corp (NASDAQ:UMPQ) a buy right now? Money managers are taking a bullish view. The number of long hedge fund bets increased by 1 lately. 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 National Instruments Corp (NASDAQ:NATI), CVR Energy, Inc. (NYSE:CVI), and Paramount Group Inc (NYSE:PGRE) to gather more data points.

According to most shareholders, hedge funds are assumed to be underperforming, outdated investment tools of yesteryear. While there are over 8000 funds with their doors open at the moment, We hone in on the bigwigs of this club, approximately 700 funds. Most estimates calculate that this group of people handle most of all hedge funds’ total capital, and by tailing their unrivaled equity investments, Insider Monkey has determined several investment strategies that have historically defeated Mr. Market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, we’re going to view the fresh action encompassing Umpqua Holdings Corp (NASDAQ:UMPQ).

Hedge fund activity in Umpqua Holdings Corp (NASDAQ:UMPQ)

At Q3’s end, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the previous quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were upping their stakes considerably (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Millennium Management, managed by Israel Englander, holds the number one position in Umpqua Holdings Corp (NASDAQ:UMPQ). Millennium Management has a $105.7 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Fisher Asset Management, led by Ken Fisher, holding a $79.1 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other peers that hold long positions contain Mark Lee’s Forest Hill Capital, Chuck Royce’s Royce & Associates and Millennium Management Subsidiary’s Decade Capital Management.

As one would reasonably expect, specific money managers have been driving this bullishness. Blue Arrow Capital Management, managed by Millennium Management Subsidiary, assembled the most valuable position in Umpqua Holdings Corp (NASDAQ:UMPQ). Blue Arrow Capital Management had $2.6 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also made a $1.4 million investment in the stock during the quarter. The other funds with new positions in the stock are Ray Carroll’s Breton Hill Capital, Matthew Tewksbury’s Stevens Capital Management, and Glenn Russell Dubin’s Highbridge Capital Management.

Let’s go over hedge fund activity in other stocks similar to Umpqua Holdings Corp (NASDAQ:UMPQ). We will take a look at National Instruments Corp (NASDAQ:NATI), CVR Energy, Inc. (NYSE:CVI), Paramount Group Inc (NYSE:PGRE), and Morningstar, Inc. (NASDAQ:MORN). This group of stocks’ market valuations resemble UMPQ’s market valuation.

As you can see these stocks had an average of 16.75 hedge funds with bullish positions and the average amount invested in these stocks was $967 million. That figure was $286 million in UMPQ’s case. National Instruments Corp (NASDAQ:NATI) is the most popular stock in this table. On the other hand Morningstar, Inc. (NASDAQ:MORN) is the least popular one with only 14 bullish hedge fund positions. Along with NATI and CVI, Umpqua Holdings Corp (NASDAQ:UMPQ) is among the most popular stocks in this group, and that makes the stock worth a closer look.