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The Smart Money’s Stance On Universal Display Corporation (OLED) And Why You Should Consider It

The equity market returns were very disappointing in the third quarter, “thanks” to the slowdown of China’s economy and the weaker-than-expected U.S economic data. It was not entirely clear whether the broader market sell-off made U.S equity valuations undervalued, but it definitely made them more attractive. It is worth mentioning that the Russell 2000 ETF (IWM) underperformed the broad-market S&P 500 ETF by more than 14 percentage points during the period of June 25th through October 30th, which clearly points to the fact that most investors, including hedge fund firms and institutional investors, heavily cut their exposure to high-potential (but seemingly riskier) small-cap stocks during the bloody third quarter. So let’s take a glance at the smart money sentiment towards Universal Display Corporation (NASDAQ:OLED) and see how it was affected.

Universal Display Corporation (NASDAQ:OLED) was in 14 hedge funds’ portfolios at the end of September. Universal Display Corporation investors should pay attention to an increase in activity from the world’s largest hedge funds recently. There were 13 hedge funds in our database with Universal Display Corporation holdings at the end of the previous quarter. 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 HubSpot Inc (NYSE:HUBS), Trustmark Corp (NASDAQ:TRMK), and WPX Energy Inc (NYSE:WPX) to gather more data points.

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Today there are several metrics market participants employ to appraise their stock investments. A couple of the most useful metrics are hedge fund and insider trading activity. our researchers have shown that, historically, those who follow the best picks of the elite hedge fund managers can outpace their index-focused peers by a superb margin (see the details here).

With all of this in mind, we’re going to analyze the recent action surrounding Universal Display Corporation (NASDAQ:OLED).

Hedge fund activity in Universal Display Corporation (NASDAQ:OLED)

At Q3’s end, a total of 14 of the hedge funds tracked by Insider Monkey held long positions in this stock, which was up by 8% from the second 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 boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Rob Citrone’s Discovery Capital Management has the largest position in Universal Display Corporation (NASDAQ:OLED), worth close to $141.7 million, accounting for 1.6% of its total 13F portfolio. Coming in second is Columbus Circle Investors, managed by Clifford Fox, which holds a $24.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism comprise Renaissance Technologies, Joel Greenblatt’s Gotham Asset Management, and Brian Ashford-Russell and Tim Woolley’s Polar Capital.

With general bullishness amongst the heavyweights, specific money managers were leading the bulls’ herd. Highbridge Capital Management, managed by Glenn Russell Dubin, created the largest position in Universal Display Corporation (NASDAQ:OLED). Highbridge Capital Management had $4.1 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $0.3 million position during the quarter. The only other fund with a brand new Universal Display Corporation position is Matthew Tewksbury’s Stevens Capital Management.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Universal Display Corporation (NASDAQ:OLED) but similarly valued. These stocks are HubSpot Inc (NYSE:HUBS), Trustmark Corp (NASDAQ:TRMK), WPX Energy Inc (NYSE:WPX), and OmniVision Technologies, Inc. (NASDAQ:OVTI). This group of stocks’ market values are similar to Universal Display Corporation’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
HUBS 10 52862 3
TRMK 8 13831 -1
WPX 37 529717 11
OVTI 23 226683 0

As you can see these stocks had an average of 19.5 hedge funds with bullish positions and the average amount invested in these stocks was $206 million. That figure was $236 million in Universal Display Corporation’s case. WPX Energy Inc (NYSE:WPX) is the most popular stock in this table. On the other hand Trustmark Corp (NASDAQ:TRMK) is the least popular one with only 8 bullish hedge fund positions. Universal Display Corporation (NASDAQ:OLED) is not the least popular stock in this group but hedge fund interest is still below average, although the amount of capital invested in the stock per money manager was higher than any other. Nonetheless, we’d rather spend our time researching stocks that hedge funds are piling on. In this regard WPX might be a better candidate to consider a long position in.

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