Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Under Armour Inc (NYSE:UA), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Hedge fund interest in Under Armour Inc (NYSE:UA) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that UA isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). 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 Huntington Ingalls Industries Inc (NYSE:HII), Jefferies Financial Group Inc. (NYSE:JEF), and Advanced Drainage Systems Inc. (NYSE:WMS) to gather more data points.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Peter Rathjens of Arrowstreet Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, billionaire John Paulson is loading up on the miners, so we are checking out stock pitches like this mining stock. We go through lists like the 10 best EV stocks 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 let’s analyze the key hedge fund action regarding Under Armour Inc (NYSE:UA).
Do Hedge Funds Think UA Is A Good Stock To Buy Now?
At the end of the second quarter, a total of 51 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UA over the last 24 quarters. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, Adage Capital Management was the largest shareholder of Under Armour Inc (NYSE:UA), with a stake worth $332.7 million reported as of the end of June. Trailing Adage Capital Management was D E Shaw, which amassed a stake valued at $132.2 million. Arrowstreet Capital, SRS Investment Management, and SRS Investment Management were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position One Fin Capital Management allocated the biggest weight to Under Armour Inc (NYSE:UA), around 3.25% of its 13F portfolio. CQS Cayman LP is also relatively very bullish on the stock, earmarking 2.04 percent of its 13F equity portfolio to UA.
Judging by the fact that Under Armour Inc (NYSE:UA) has faced a decline in interest from the entirety of the hedge funds we track, it’s safe to say that there were a few hedge funds who sold off their positions entirely by the end of the second quarter. Interestingly, Nicolai Tangen’s Ako Capital sold off the biggest investment of the 750 funds watched by Insider Monkey, valued at about $135.7 million in stock. Jack Woodruff’s fund, Candlestick Capital Management, also dumped its stock, about $57.8 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 also examine hedge fund activity in other stocks – not necessarily in the same industry as Under Armour Inc (NYSE:UA) but similarly valued. These stocks are Huntington Ingalls Industries Inc (NYSE:HII), Jefferies Financial Group Inc. (NYSE:JEF), Advanced Drainage Systems Inc. (NYSE:WMS), Arrow Electronics, Inc. (NYSE:ARW), Polaris Inc. (NYSE:PII), Life Storage, Inc. (NYSE:LSI), and Mirati Therapeutics, Inc. (NASDAQ:MRTX). This group of stocks’ market valuations match UA’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HII | 21 | 153435 | 1 |
| JEF | 29 | 698210 | -9 |
| WMS | 26 | 1337049 | -3 |
| ARW | 30 | 711641 | 7 |
| PII | 20 | 464211 | -9 |
| LSI | 21 | 261561 | -5 |
| MRTX | 55 | 2790783 | -2 |
| Average | 28.9 | 916699 | -2.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 28.9 hedge funds with bullish positions and the average amount invested in these stocks was $917 million. That figure was $1787 million in UA’s case. Mirati Therapeutics, Inc. (NASDAQ:MRTX) is the most popular stock in this table. On the other hand Polaris Inc. (NYSE:PII) is the least popular one with only 20 bullish hedge fund positions. Under Armour Inc (NYSE:UA) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UA is 79.3. 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. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 29.6% in 2021 through November 5th and still beat the market by 3.1 percentage points. Hedge funds were also right about betting on UA as the stock returned 14.9% since the end of Q2 (through 11/5) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Follow Under Armour Inc. (NYSE:UA)
Follow Under Armour Inc. (NYSE:UA)
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Disclosure: None. This article was originally published at Insider Monkey.
