Is United Natural Foods, Inc. (NASDAQ:UNFI) a buy, sell, or hold? Hedge funds are taking a bearish view. The number of bullish hedge fund bets stayed the same which is a slightly negative development in our experience
In the eyes of most traders, hedge funds are seen as worthless, old financial vehicles of years past. While there are greater than 8000 funds with their doors open at present, we look at the top tier of this group, about 450 funds. It is widely believed that this group has its hands on the lion's share of the smart money's total asset base, and by paying attention to their top picks, we have found a few investment strategies that have historically outpaced Mr. Market. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually 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 trumped the S&P 500 index by 24 percentage points in 7 months (see the details here).
Just as integral, bullish insider trading sentiment is a second way to parse down the investments you're interested in. Just as you'd expect, there are a number of motivations for a corporate insider to get rid of shares of his or her company, but just one, very obvious reason why they would initiate a purchase. Various empirical studies have demonstrated the impressive potential of this tactic if investors know where to look (learn more here).
Consequently, let's take a peek at the latest action encompassing United Natural Foods, Inc. (NASDAQ:UNFI).
In preparation for this year, a total of 9 of the hedge funds we track were long in this stock, a change of 0% from one quarter earlier. With the smart money's sentiment swirling, there exists an "upper tier" of notable hedge fund managers who were increasing their holdings significantly.
Of the funds we track, Donald Chiboucis's Columbus Circle Investors had the most valuable position in United Natural Foods, Inc. (NASDAQ:UNFI), worth close to $30 million, accounting for 0.2% of its total 13F portfolio. On Columbus Circle Investors's heels is Ken Fisher of Fisher Asset Management, with a $17 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other hedge funds that hold long positions include Chuck Royce's Royce & Associates, Steven Cohen's SAC Capital Advisors and Mario Gabelli's GAMCO Investors.
Due to the fact that United Natural Foods, Inc. (NASDAQ:UNFI) has witnessed falling interest from the aggregate hedge fund industry, logic holds that there is a sect of fund managers who sold off their positions entirely last quarter. Interestingly, Richard Driehaus's Driehaus Capital dropped the biggest investment of the "upper crust" of funds we track, comprising close to $1 million in stock.. J. Alan Reid, Jr.'s fund, Forward Management, also said goodbye to its stock, about $1 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider buying is best served when the company in question has experienced transactions within the past six months. Over the last six-month time period, United Natural Foods, Inc. (NASDAQ:UNFI) has seen zero unique insiders buying, and 2 insider sales (see the details of insider trades here).
Let's also examine hedge fund and insider activity in other stocks similar to United Natural Foods, Inc. (NASDAQ:UNFI). These stocks are AMCON Distributing Co. (NYSEAMEX:DIT), Nash-Finch Company (NASDAQ:NAFC), SYSCO Corporation (NYSE:SYY), Spartan Stores, Inc. (NASDAQ:SPTN), and The Chefs Warehouse, Inc (NASDAQ:CHEF). This group of stocks are in the food wholesale industry and their market caps match UNFI's market cap.