Here is What Hedge Funds Think About Union Pacific Corporation (UNP)

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.

Union Pacific Corporation (NYSE:UNP) was in 55 hedge funds’ portfolios at the end of the third quarter of 2015. UNP shareholders have witnessed a decrease in support from the world’s most elite money managers recently. There were 64 hedge funds in our database with UNP positions at the end of the previous quarter. At the end of this article we will also compare UNP to other stocks including Banco Santander, S.A. (ADR) (NYSE:SAN), Goldman Sachs Group, Inc. (NYSE:GS), and American Express Company (NYSE:AXP) to get a better sense of its popularity.

To most shareholders, hedge funds are seen as worthless, outdated financial vehicles of yesteryear. While there are more than 8000 funds in operation at the moment, we choose to focus on the aristocrats of this club, about 700 funds. Most estimates calculate that this group of people orchestrate most of the hedge fund industry’s total asset base, and by shadowing their matchless stock picks, Insider Monkey has spotted a number of investment strategies that have historically surpassed the broader indices. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points per annum for a decade in their back tests.

With all of this in mind, we’re going to go over the new action encompassing Union Pacific Corporation (NYSE:UNP).

How have hedgies been trading Union Pacific Corporation (NYSE:UNP)?

At the end of the third quarter, a total of 55 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -14% from the previous quarter. With the smart money’s positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their holdings significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the biggest position in Union Pacific Corporation (NYSE:UNP). Arrowstreet Capital has a $122.8 million position in the stock, comprising 0.6% of its 13F portfolio. The second largest stake is held by Phill Gross and Robert Atchinson of Adage Capital Management, with a $114.4 million position; 0.3% of its 13F portfolio is allocated to the stock. Remaining professional money managers that hold long positions comprise James Dinan’s York Capital Management, Richard Chilton’s Chilton Investment Company and Charles Paquelet’s Skylands Capital.

Because Union Pacific Corporation (NYSE:UNP) has experienced declining sentiment from the smart money, logic holds that there exist a select few hedgies who sold off their full holdings by the end of the third quarter. It’s worth mentioning that Jim Simons’s Renaissance Technologies sold off the largest investment of all the hedgies tracked by Insider Monkey, comprising an estimated $192.8 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also sold off its stock, about $48.9 million worth. These moves are intriguing to say the least, as total hedge fund interest was cut by 9 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Union Pacific Corporation (NYSE:UNP) but similarly valued. These stocks are Banco Santander, S.A. (ADR) (NYSE:SAN), Goldman Sachs Group, Inc. (NYSE:GS), American Express Company (NYSE:AXP), and Diageo plc (ADR) (NYSE:DEO). All of these stocks’ market caps are similar to UNP’s market cap.

As you can see these stocks had an average of 39 hedge funds with bullish positions and the average amount invested in these stocks was $5746 million. That figure was $1514 million in UNP’s case. Goldman Sachs Group, Inc. (NYSE:GS) is the most popular stock in this table. On the other hand, Banco Santander, S.A. (ADR) (NYSE:SAN) is the least popular one. Although Union Pacific Corporation (NYSE:UNP) is not the most popular stock in this group, it has attracted signific interest from investors. This may imply it is a good stock to buy, but still but we’d rather spend our time researching stocks that hedge funds are piling on. For that kind of alternatives, you may want to consider GS as your choice in this particular case.