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Hedge Funds Aren’t Crazy About UBS AG (USA) (NYSE:UBS) Anymore – Royal Bank of Scotland Group plc (ADR) (NYSE:RBS), Banco Santander, S.A. (ADR) (NYSE:SAN)

UBS AG (USA) (NYSE:UBS) shareholders have witnessed a decrease in hedge fund interest recently.

In the eyes of most shareholders, hedge funds are assumed to be underperforming, outdated investment tools of the past. While there are over 8000 funds trading today, we at Insider Monkey hone in on the moguls of this club, close to 450 funds. It is widely believed that this group oversees most of all hedge funds’ total capital, and by monitoring their best equity investments, we have revealed a few investment strategies that have historically outstripped the S&P 500 index. Our small-cap hedge fund strategy beat 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 outclassed the S&P 500 index by 25 percentage points in 6.5 month (explore the details and some picks here).


Equally as key, positive insider trading activity is another way to break down the stock market universe. Obviously, there are plenty of incentives for an insider to sell shares of his or her company, but only one, very clear reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this method if investors know what to do (learn more here).

Now, let’s take a glance at the latest action regarding UBS AG (USA) (NYSE:UBS).

How are hedge funds trading UBS AG (USA) (NYSE:UBS)?

At year’s end, a total of 11 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedgies’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly.

Of the funds we track, Pzena Investment Management, managed by Richard S. Pzena, holds the largest position in UBS AG (USA) (NYSE:UBS). Pzena Investment Management has a $221 million position in the stock, comprising 1.8% of its 13F portfolio. Sitting at the No. 2 spot is McKinley Capital Management, managed by Robert B. Gillam, which held a $13 million position; 0.7% of its 13F portfolio is allocated to the company. Remaining hedge funds that are bullish include Philippe Jabre’s Jabre Capital Partners, Crispin Odey’s Odey Asset Management Group and Israel Englander’s Millennium Management.

Due to the fact that UBS AG (USA) (NYSE:UBS) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedgies who sold off their full holdings heading into 2013. It’s worth mentioning that Rob Citrone’s Discovery Capital Management sold off the largest stake of the “upper crust” of funds we monitor, comprising close to $7 million in stock.. Mike Vranos’s fund, Ellington, also dropped its stock, about $1 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

How are insiders trading UBS AG (USA) (NYSE:UBS)?

Insider buying is at its handiest when the company in question has experienced transactions within the past 180 days. Over the latest six-month time frame, UBS AG (USA) (NYSE:UBS) has seen zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).

Let’s also examine hedge fund and insider activity in other stocks similar to UBS AG (USA) (NYSE:UBS). These stocks are Itau Unibanco Holding SA (ADR) (NYSE:ITUB), Royal Bank of Scotland Group plc (ADR) (NYSE:RBS), Banco Santander, S.A. (ADR) (NYSE:SAN), Lloyds Banking Group PLC (ADR) (NYSE:LYG), and Barclays PLC (ADR) (NYSE:BCS). All of these stocks are in the foreign money center banks industry and their market caps match UBS’s market cap.

Company Name # of Hedge Funds # of Insiders Buying # of Insiders Selling
Itau Unibanco Holding SA (ADR) (NYSE:ITUB) 23 0 0
Royal Bank of Scotland Group plc (ADR) (NYSE:RBS) 12 0 0
Banco Santander, S.A. (ADR) (NYSE:SAN) 12 1 0
Lloyds Banking Group PLC (ADR) (NYSE:LYG) 7 0 0
Barclays PLC (ADR) (NYSE:BCS) 11 0 0

With the results exhibited by Insider Monkey’s strategies, retail investors should always pay attention to hedge fund and insider trading sentiment, and UBS AG (USA) (NYSE:UBS) is an important part of this process.

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