At the end of February we announced the arrival of the first US recession since 2009 and we predicted that the market will decline by at least 20% in (see why hell is coming). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards UGI Corp (NYSE:UGI) at the end of the first quarter and determine whether the smart money was really smart about this stock.
UGI Corp (NYSE:UGI) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that UGI isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the 21st century investor’s toolkit there are many indicators market participants can use to assess their holdings. A duo of the best indicators are hedge fund and insider trading activity. Our experts have shown that, historically, those who follow the top picks of the elite hedge fund managers can outperform their index-focused peers by a solid amount (see the details here).
Ken Griffin of Citadel Investment Group
At Insider Monkey we scour multiple sources to uncover the next great investment idea. There is a lot of volatility in the markets and this presents amazing investment opportunities from time to time. For example, this trader claims to deliver juiced up returns with one trade a week, so we are checking out his highest conviction idea. A second trader claims to score lucrative profits by utilizing a “weekend trading strategy”, so we look into his strategy’s picks. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We recently recommended several stocks partly inspired by legendary Bill Miller’s investor letter. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s view the latest hedge fund action regarding UGI Corp (NYSE:UGI).
How are hedge funds trading UGI Corp (NYSE:UGI)?
At the end of the first quarter, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UGI over the last 18 quarters. With hedgies’ sentiment swirling, there exists a select group of key hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
Among these funds, Diamond Hill Capital held the most valuable stake in UGI Corp (NYSE:UGI), which was worth $68 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $63.4 million worth of shares. Millennium Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Invenomic Capital Management allocated the biggest weight to UGI Corp (NYSE:UGI), around 2.45% of its 13F portfolio. Fondren Management is also relatively very bullish on the stock, setting aside 0.54 percent of its 13F equity portfolio to UGI.
Consequently, key hedge funds have jumped into UGI Corp (NYSE:UGI) headfirst. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, assembled the biggest position in UGI Corp (NYSE:UGI). Arrowstreet Capital had $6.7 million invested in the company at the end of the quarter. Greg Eisner’s Engineers Gate Manager also made a $5.5 million investment in the stock during the quarter. The other funds with brand new UGI positions are Dmitry Balyasny’s Balyasny Asset Management, Jinghua Yan’s TwinBeech Capital, and Peter Muller’s PDT Partners.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as UGI Corp (NYSE:UGI) but similarly valued. These stocks are Genpact Limited (NYSE:G), National Retail Properties, Inc. (NYSE:NNN), Bruker Corporation (NASDAQ:BRKR), and Lumentum Holdings Inc (NASDAQ:LITE). This group of stocks’ market caps resemble UGI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| G | 34 | 335413 | -3 |
| NNN | 19 | 62007 | -4 |
| BRKR | 21 | 109920 | -4 |
| LITE | 34 | 487864 | -3 |
| Average | 27 | 248801 | -3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 27 hedge funds with bullish positions and the average amount invested in these stocks was $249 million. That figure was $253 million in UGI’s case. Genpact Limited (NYSE:G) is the most popular stock in this table. On the other hand National Retail Properties, Inc. (NYSE:NNN) is the least popular one with only 19 bullish hedge fund positions. UGI Corp (NYSE:UGI) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 12.3% in 2020 through June 30th but beat the market by 15.5 percentage points. A small number of hedge funds were also right about betting on UGI, though not to the same extent, as the stock returned 20.5% during the second quarter and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.
