Will the new coronavirus cause a recession in US in the next 6 months? On February 27th, we put the probability at 75% and we predicted that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards UBS Group AG (NYSE:UBS).
Is UBS Group AG (NYSE:UBS) a buy here? Prominent investors are selling. The number of bullish hedge fund positions shrunk by 2 recently. Our calculations also showed that UBS isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
If you’d ask most stock holders, hedge funds are viewed as underperforming, old investment vehicles of years past. While there are more than 8000 funds with their doors open at the moment, Our experts hone in on the masters of this club, around 850 funds. These hedge fund managers orchestrate most of the smart money’s total capital, and by monitoring their inimitable stock picks, Insider Monkey has found a few investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Crispin Odey of Odey Asset Management Group
We leave no stone unturned when looking for the next great investment idea. For example, COVID-19 pandemic is still the main driver of stock prices. So we are checking out this trader’s corona catalyst trades. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind we’re going to take a look at the fresh hedge fund action regarding UBS Group AG (NYSE:UBS).
What have hedge funds been doing with UBS Group AG (NYSE:UBS)?
Heading into the first quarter of 2020, a total of 14 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the third quarter of 2019. The graph below displays the number of hedge funds with bullish position in UBS over the last 18 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Fisher Asset Management was the largest shareholder of UBS Group AG (NYSE:UBS), with a stake worth $659.8 million reported as of the end of September. Trailing Fisher Asset Management was Renaissance Technologies, which amassed a stake valued at $137.9 million. GQG Partners, Pzena Investment Management, and Odey Asset Management Group 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 Odey Asset Management Group allocated the biggest weight to UBS Group AG (NYSE:UBS), around 1.9% of its 13F portfolio. GQG Partners is also relatively very bullish on the stock, earmarking 0.82 percent of its 13F equity portfolio to UBS.
Seeing as UBS Group AG (NYSE:UBS) has witnessed bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedgies who were dropping their entire stakes by the end of the third quarter. It’s worth mentioning that Paul Marshall and Ian Wace’s Marshall Wace LLP cut the largest stake of the “upper crust” of funds tracked by Insider Monkey, comprising close to $17.3 million in stock, and Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners was right behind this move, as the fund sold off about $1.7 million worth. These moves are important to note, as total hedge fund interest fell by 2 funds by the end of the third quarter.
Let’s check out hedge fund activity in other stocks similar to UBS Group AG (NYSE:UBS). These stocks are Activision Blizzard, Inc. (NASDAQ:ATVI), Banco Santander (Brasil) SA (NYSE:BSBR), Moody’s Corporation (NYSE:MCO), and American International Group Inc (NYSE:AIG). This group of stocks’ market caps are similar to UBS’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ATVI | 76 | 2811204 | 3 |
| BSBR | 8 | 91437 | -7 |
| MCO | 49 | 9218123 | -6 |
| AIG | 52 | 2870459 | -1 |
| Average | 46.25 | 3747806 | -2.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 46.25 hedge funds with bullish positions and the average amount invested in these stocks was $3748 million. That figure was $1045 million in UBS’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand Banco Santander (Brasil) SA (NYSE:BSBR) is the least popular one with only 8 bullish hedge fund positions. UBS Group AG (NYSE:UBS) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 1.0% in 2020 through May 1st but beat the market by 12.9 percentage points. Unfortunately UBS wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); UBS investors were disappointed as the stock returned -17.4% during the same time period and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
