Successful Investors Aren’t All That Hungry for United Natural Foods, Inc. (UNFI)

The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge funds have been producing disappointing net returns in recent years, however that was partly due to the poor performance of small-cap stocks in general. Well, small-cap stocks finally turned the corner and have been beating the large-cap stocks by more than 10 percentage points over the last 5 months.This means the relevancy of hedge funds’ public filings became inarguable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards United Natural Foods, Inc. (NASDAQ:UNFI).

Hedge fund interest in United Natural Foods, Inc. (NASDAQ:UNFI) shares was flat during the last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as The Medicines Company (NASDAQ:MDCO), SolarCity Corp (NASDAQ:SCTY), and Owens & Minor, Inc. (NYSE:OMI) to gather more data points.

At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.

How are hedge funds trading United Natural Foods, Inc. (NASDAQ:UNFI)?

Heading into the fourth quarter of 2016, a total of 21 of the hedge funds tracked by Insider Monkey were long this stock, unchanged from one quarter earlier. Hedge fund ownership of the stock is up by about 30% in the last year. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

Of the funds tracked by Insider Monkey, Ken Fisher’s Fisher Asset Management has the number one position in United Natural Foods, Inc. (NASDAQ:UNFI), worth close to $29.7 million. Coming in second is Ian Simm of Impax Asset Management, with a $27.7 million position; the fund has 1.3% of its 13F portfolio invested in the stock. Remaining peers with similar optimism consist of Ken Griffin’s Citadel Investment Group, Greg Poole’s Echo Street Capital Management and Mario Gabelli’s GAMCO Investors.

Because United Natural Foods, Inc. (NASDAQ:UNFI) has experienced bearish sentiment from hedge fund managers, we can see that there lies a certain “tier” of hedge funds who sold off their positions entirely last quarter. It’s worth mentioning that Ken Griffin’s Citadel Investment Group dropped the largest stake of all the hedgies followed by Insider Monkey, comprising close to $10.1 million in call options (while retaining its long position). Guy Shahar’s fund, DSAM Partners, also cut its stock, about $3.1 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to United Natural Foods, Inc. (NASDAQ:UNFI). We will take a look at The Medicines Company (NASDAQ:MDCO), SolarCity Corp (NASDAQ:SCTY), Owens & Minor, Inc. (NYSE:OMI), and Fulton Financial Corp (NASDAQ:FULT). This group of stocks’ market valuations are similar to UNFI’s market valuation.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $208 million. That figure was $163 million in UNFI’s case. The Medicines Company (NASDAQ:MDCO) is the most popular stock in this table. On the other hand Fulton Financial Corp (NASDAQ:FULT) is the least popular one with only 10 bullish hedge fund positions. United Natural Foods, Inc. (NASDAQ:UNFI) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard MDCO might be a better candidate to consider a long position in.

Disclosure: None