Is UBS AG (USA) (NYSE:UBS) undervalued? The smart money is taking a bearish view. The number of bullish hedge fund positions stayed the same which is a slightly negative development in our experience
In the financial world, there are dozens of methods shareholders can use to monitor Mr. Market. A couple of the most useful are hedge fund and insider trading interest. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the elite fund managers can trounce the broader indices by a solid amount (see just how much).
Equally as key, positive insider trading activity is another way to parse down the marketplace. As the old adage goes: there are a variety of reasons for a corporate insider to get rid of shares of his or her company, but just one, very simple reason why they would initiate a purchase. Many empirical studies have demonstrated the useful potential of this method if piggybackers understand what to do (learn more here).
Consequently, let’s take a peek at the key action regarding UBS AG (USA) (NYSE:UBS).
How are hedge funds trading UBS AG (USA) (NYSE:UBS)?
At Q1’s end, a total of 13 of the hedge funds we track held long positions in this stock, a change of 0% from one quarter earlier. With hedgies’ positions undergoing their usual ebb and flow, there exists a few notable hedge fund managers who were boosting their stakes significantly.
Of the funds we track, Richard S. Pzena’s Pzena Investment Management had the most valuable position in UBS AG (USA) (NYSE:UBS), worth close to $226.1 million, comprising 1.6% of its total 13F portfolio. Coming in second is McKinley Capital Management, managed by Robert B. Gillam, which held a $20.4 million position; 0.9% of its 13F portfolio is allocated to the stock. Other hedge funds that hold long positions include Crispin Odey’s Odey Asset Management Group, Jim Simons’s Renaissance Technologies and David Dreman’s Dreman Value Management.
Since UBS AG (USA) (NYSE:UBS) has witnessed falling interest from hedge fund managers, logic holds that there were a few fund managers who were dropping their full holdings in Q1. At the top of the heap, Philippe Jabre’s Jabre Capital Partners dumped the biggest investment of the “upper crust” of funds we track, worth an estimated $12.7 million in call options. Charles Davidson’s fund, Wexford Capital, also cut its stock, about $1.2 million worth. These transactions are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Insider trading activity in UBS AG (USA) (NYSE:UBS)
Insider trading activity, especially when it’s bullish, is particularly usable when the primary stock in question has experienced transactions within the past six months. Over the latest six-month time frame, UBS AG (USA) (NYSE:UBS) has experienced zero unique insiders purchasing, and zero insider sales (see the details of insider trades here).
Let’s also review hedge fund and insider activity in other stocks similar to UBS AG (USA) (NYSE:UBS). These stocks are Itau Unibanco Holding SA (ADR) (NYSE:ITUB), Royal Bank of Scotland Group plc (ADR) (NYSE:RBS), Banco Santander, S.A. (ADR) (NYSE:SAN), Lloyds Banking Group PLC (ADR) (NYSE:LYG), and Barclays PLC (ADR) (NYSE:BCS). All of these stocks are in the foreign money center banks industry and their market caps are closest to UBS’s market cap.