Should You Buy Ultrapar Participacoes SA (ADR) (UGP)?

The market has been volatile as the Federal Reserve winds down its easy money policies. Small cap stocks have been hit hard as a result, as the Russell 2000 ETF (IWM) has underperformed the larger S&P 500 ETF (SPY) by more than 14 percentage points between June 25th and the end of October. SEC filings and hedge fund investor letters indicate that the smart money seems to be paring back their overall long exposure, and the funds’ movements is one of the reasons why the major indexes have retraced. In this article, we analyze what the smart money thinks of Ultrapar Participacoes SA (ADR) (NYSE:UGP) and find out how it is affected by hedge funds’ moves.

Hedge fund interest in Ultrapar Participacoes SA (ADR) shares was flat at the end of last quarter. This is usually a negative indicator. At the end of this article we will also compare UGP to other stocks including Microchip Technology Inc. (NASDAQ:MCHP), Delhaize Group (ADR) (NYSE:DEG), and Tripadvisor Inc (NASDAQ:TRIP) to get a better sense of its popularity.

In the financial world there are tons of signals market participants use to appraise their stock investments. Some of the less known signals are hedge fund and insider trading sentiment. We have shown that, historically, those who follow the best picks of the elite money managers can outpace the market by a solid amount (see the details here).

Now, let’s take a glance at the recent action surrounding Ultrapar Participacoes SA (ADR) (NYSE:UGP).

What have hedge funds been doing with Ultrapar Participacoes SA (ADR) (NYSE:UGP)?

At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to Insider Monkey’s hedge fund database, Renaissance Technologies, managed by Jim Simons, holds the number one position in Ultrapar Participacoes SA (ADR) (NYSE:UGP). Renaissance Technologies has a $79 million position in the stock, comprising 0.2% of its 13F portfolio. The second largest stake is held by Fisher Asset Management, led by Ken Fisher, holding a $3.8 million position; the fund has less than 0.1% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions include David Costen Haley’s HBK Investments, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management.