With the third-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the fourth quarter. One of these stocks was Ubiquiti Networks Inc (NASDAQ:UBNT).
Ubiquiti Networks Inc (NASDAQ:UBNT) investors should be aware of a decrease in activity from the world’s largest hedge funds in recent months. At the end of this article we will also compare UBNT to other stocks including Hill-Rom Holdings, Inc. (NYSE:HRC), Boardwalk Pipeline Partners, LP (NYSE:BWP), and Cedar Fair, L.P. (NYSE:FUN) to get a better sense of its popularity.
Follow Ubiquiti Inc. (NYSE:UI)
Follow Ubiquiti Inc. (NYSE:UI)
To most stock holders, hedge funds are viewed as worthless, old investment tools of yesteryear. While there are greater than 8000 funds trading at present, Our experts choose to focus on the moguls of this club, around 700 funds. These hedge fund managers shepherd the majority of all hedge funds’ total asset base, and by following their first-class investments, Insider Monkey has deciphered various investment strategies that have historically beaten the S&P 500 index. Insider Monkey’s small-cap hedge fund strategy outrun the S&P 500 index by 12 percentage points a year for a decade in their back tests.
With all of this in mind, let’s take a look at the latest action surrounding Ubiquiti Networks Inc (NASDAQ:UBNT).
What does the smart money think about Ubiquiti Networks Inc (NASDAQ:UBNT)?
Heading into Q4, a total of 10 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Charles Akre’s Akre Capital Management has the most valuable position in Ubiquiti Networks Inc (NASDAQ:UBNT), worth close to $90.8 million, comprising 2.1% of its total 13F portfolio. The second most bullish fund manager is Makaira Partners, managed by Thomas Bancroft, which holds an $38.4 million position; the fund has 6.3% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions contain John Kim’s Karamaan Group, and Joel Greenblatt’s Gotham Asset Management.
Because Ubiquiti Networks Inc (NASDAQ:UBNT) has witnessed a declination in interest from hedge fund managers, logic holds that there was a specific group of money managers that slashed their full holdings last quarter. At the top of the heap, Ross Margolies’ Stelliam Investment Management dropped the biggest investment of the 700 funds watched by Insider Monkey, comprising about $20.4 million in call options., and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund sold off about $7.7 million worth. These moves are important to note, as total hedge fund interest was cut by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Ubiquiti Networks Inc (NASDAQ:UBNT). We will take a look at Hill-Rom Holdings, Inc. (NYSE:HRC), Boardwalk Pipeline Partners, LP (NYSE:BWP), Cedar Fair, L.P. (NYSE:FUN), and Cobalt International Energy, Inc. (NYSE:CIE). All of these stocks’ market caps are similar to UBNT’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HRC | 21 | 339896 | -1 |
| BWP | 17 | 170194 | 2 |
| FUN | 10 | 242635 | -2 |
| CIE | 18 | 800105 | 1 |
As you can see these stocks had an average of 16.5 hedge funds with bullish positions and the average amount invested in these stocks was $388 million. That figure was $150 million in UBNT’s case. Hill-Rom Holdings, Inc. (NYSE:HRC) is the most popular stock in this table. On the other hand Cedar Fair, L.P. (NYSE:FUN) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Ubiquiti Networks Inc (NASDAQ:UBNT) is even less popular than FUN. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock. This isn’t necessarily bad news. Although it is possible that hedge funds may think the stock is overpriced and view the stock as a short candidate, they may not be very familiar with the bullish thesis. In either case more research is warranted.
