UDR, Inc. (UDR): Hedge Funds and Insiders Are Bearish, What Should You Do?

Is UDR, Inc. (NYSE:UDR) a buy, sell, or hold? Prominent investors are turning less bullish. The number of long hedge fund positions dropped by 2 recently.

In the eyes of most investors, hedge funds are assumed to be underperforming, outdated investment tools of years past. While there are more than 8000 funds in operation at the moment, we hone in on the bigwigs of this club, about 450 funds. It is widely believed that this group has its hands on the majority of the hedge fund industry’s total capital, and by tracking their best stock picks, we have revealed a number of investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy outperformed the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 23.3 percentage points in 8 months (see the details here).

Just as integral, optimistic insider trading sentiment is a second way to break down the marketplace. As the old adage goes: there are lots of reasons for a corporate insider to get rid of shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the useful potential of this strategy if shareholders know what to do (learn more here).

With these “truths” under our belt, it’s important to take a glance at the key action regarding UDR, Inc. (NYSE:UDR).

How are hedge funds trading UDR, Inc. (NYSE:UDR)?

Heading into Q2, a total of 9 of the hedge funds we track held long positions in this stock, a change of -18% from the previous quarter. With hedge funds’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes considerably.

According to our comprehensive database, Carlson Capital, managed by Clint Carlson, holds the largest position in UDR, Inc. (NYSE:UDR). Carlson Capital has a $20.2 million position in the stock, comprising 0.3% of its 13F portfolio. Coming in second is Ken Gray and Steve Walsh of Bryn Mawr Capital, with a $17.9 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Other hedgies that are bullish include Matthew Tewksbury’s Stevens Capital Management, Ken Griffin’s Citadel Investment Group and Israel Englander’s Millennium Management.

Since UDR, Inc. (NYSE:UDR) has witnessed declining sentiment from the aggregate hedge fund industry, it’s safe to say that there is a sect of money managers that elected to cut their full holdings last quarter. Intriguingly, John Khoury’s Long Pond Capital dumped the biggest position of the 450+ funds we key on, totaling an estimated $31.4 million in stock.. Brian Taylor’s fund, Pine River Capital Management, also dumped its stock, about $21.9 million worth. These transactions are interesting, as total hedge fund interest fell by 2 funds last quarter.

What have insiders been doing with UDR, Inc. (NYSE:UDR)?

Insider buying is most useful when the company in focus has experienced transactions within the past six months. Over the latest half-year time frame, UDR, Inc. (NYSE:UDR) has experienced zero unique insiders buying, and 1 insider sales (see the details of insider trades here).

Let’s also review hedge fund and insider activity in other stocks similar to UDR, Inc. (NYSE:UDR). These stocks are Two Harbors Investment Corp (NYSE:TWO), American Campus Communities, Inc. (NYSE:ACC), Senior Housing Properties Trust (NYSE:SNH), Essex Property Trust Inc (NYSE:ESS), and Camden Property Trust (NYSE:CPT). This group of stocks are the members of the reit – residential industry and their market caps match UDR’s market cap.