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Do Hedge Funds Love Universal Electronics Inc (UEIC)?

Is Universal Electronics Inc (NASDAQ:UEIC) a good equity to bet on right now? We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Is Universal Electronics Inc (NASDAQ:UEIC) the right pick for your portfolio? Prominent investors are in a pessimistic mood. The number of bullish hedge fund positions decreased by 1 in recent months. Our calculations also showed that UEIC isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In the 21st century investor’s toolkit there are several signals stock traders use to value their holdings. Two of the less known signals are hedge fund and insider trading activity. Our researchers have shown that, historically, those who follow the top picks of the best fund managers can outclass the S&P 500 by a significant amount (see the details here).

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy  based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. Let’s take a look at the key hedge fund action encompassing Universal Electronics Inc (NASDAQ:UEIC).

What have hedge funds been doing with Universal Electronics Inc (NASDAQ:UEIC)?

At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -8% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UEIC over the last 17 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, AQR Capital Management, managed by Cliff Asness, holds the largest position in Universal Electronics Inc (NASDAQ:UEIC). AQR Capital Management has a $6 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On AQR Capital Management’s heels is Renaissance Technologies which holds a $5.7 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that hold long positions consist of Ken Griffin’s Citadel Investment Group, Israel Englander’s Millennium Management and John Overdeck and David Siegel’s Two Sigma Advisors. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to Universal Electronics Inc (NASDAQ:UEIC), around 0.12% of its 13F portfolio. Weld Capital Management is also relatively very bullish on the stock, setting aside 0.08 percent of its 13F equity portfolio to UEIC.

Due to the fact that Universal Electronics Inc (NASDAQ:UEIC) has faced falling interest from hedge fund managers, it’s easy to see that there was a specific group of hedgies that decided to sell off their entire stakes heading into Q4. Intriguingly, Josh Goldberg’s G2 Investment Partners Management dumped the biggest investment of the 750 funds watched by Insider Monkey, worth close to $0.5 million in call options. Matthew Hulsizer’s fund, PEAK6 Capital Management, also cut its call options, about $0.4 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 1 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to Universal Electronics Inc (NASDAQ:UEIC). We will take a look at Retail Value Inc. (NYSE:RVI), Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA), Enova International Inc (NYSE:ENVA), and WAVE Life Sciences Ltd. (NASDAQ:WVE). This group of stocks’ market caps are similar to UEIC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RVI 16 199915 -1
LTRPA 25 199428 4
ENVA 20 131728 0
WVE 17 260950 -3
Average 19.5 198005 0

View table here if you experience formatting issues.

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 $198 million. That figure was $31 million in UEIC’s case. Liberty Tripadvisor Holdings Inc (NASDAQ:LTRPA) is the most popular stock in this table. On the other hand Retail Value Inc. (NYSE:RVI) is the least popular one with only 16 bullish hedge fund positions. Compared to these stocks Universal Electronics Inc (NASDAQ:UEIC) is even less popular than RVI. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on UEIC, though not to the same extent, as the stock returned 9.2% during the fourth quarter (through 11/30) and outperformed the market as well.

Disclosure: None. This article was originally published at Insider Monkey.

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