While the market driven by short-term sentiment influenced by uncertainty regarding the future of the interest rate environment in the US, the low commodity prices and the economic turmoil in China, many smart money investors are keeping their optimism regarding the current bull run, while still hedging many of their long positions. However, as we know, big investors usually buy stocks with strong fundamentals, which is why we believe we can profit from imitating them. In this article, we are going to take a look at the smart money sentiment surrounding Universal Electronics Inc (NASDAQ:UEIC).
Universal Electronics Inc (NASDAQ:UEIC)’s stock has lost 23% since the beginning of the year, but registered an increase in popularity among the funds we track during the third quarter. The company was reported in 11 hedge funds’ portfolios at the end of the third quarter of 2015, compared to 8 hedge funds in our database with UEIC positions 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 IAMGOLD Corporation (USA) (NYSE:IAG), The Rubicon Project Inc (NYSE:RUBI), and Constellium NV (NYSE:CSTM) to gather more data points.
In the eyes of most shareholders, hedge funds are seen as worthless, outdated financial tools of yesteryear. While there are greater than an 8000 funds trading today, Our researchers look at the crème de la crème of this group, around 700 funds. These money managers handle most of all hedge funds’ total capital, and by paying attention to their unrivaled investments, Insider Monkey has come up with various investment strategies that have historically exceeded Mr. Market. Insider Monkey’s small-cap hedge fund strategy outperformed the S&P 500 index by 12 percentage points annually for a decade in their back tests.
Now, we’re going to review the new action encompassing Universal Electronics Inc (NASDAQ:UEIC).
Hedge fund activity in Universal Electronics Inc (NASDAQ:UEIC)
At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey held long positions in this stock, an increase of 38% from the second quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were increasing their holdings considerably (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Jim Simons’ Renaissance Technologies has the number one position in Universal Electronics Inc (NASDAQ:UEIC), worth close to $4.3 million, corresponding to less than 0.1%% of its total 13F portfolio. The second most bullish fund manager is Citadel Investment Group, led by Ken Griffin, holding a $2.3 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Other hedge funds and institutional investors that are bullish include Chuck Royce’s Royce & Associates, D. E. Shaw’s D E Shaw, and Cliff Asness’ AQR Capital Management.
As industrywide interest jumped, specific money managers have jumped into Universal Electronics Inc (NASDAQ:UEIC) headfirst. Citadel Investment Group initiated the biggest position in Universal Electronics Inc (NASDAQ:UEIC). Israel Englander’s Millennium Management also made a $1 million investment in the stock during the quarter. The other funds with new positions in the stock are Chao Ku’s Nine Chapters Capital Management, Ken Gray and Steve Walsh’s Bryn Mawr Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Universal Electronics Inc (NASDAQ:UEIC) but similarly valued. These stocks are IAMGOLD Corporation (USA) (NYSE:IAG), The Rubicon Project Inc (NYSE:RUBI), Constellium NV (NYSE:CSTM), and Wstrn Ast Clymr Infltn Lkd Opts & Inc Fd (NYSE:WIW). This group of stocks’ market values are similar to UEIC’s market value.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 14 hedge funds with bullish positions and the average amount invested in these stocks was $74 million. That figure was $13 million in UEIC’s case. Constellium NV (NYSE:CSTM) is the most popular stock in this table. On the other hand Wstrn Ast Clymr Infltn Lkd Opts & Inc Fd (NYSE:WIW) is the least popular one with only 4 bullish hedge fund positions. Universal Electronics Inc (NASDAQ:UEIC) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard CSTM might be a better candidate to consider a long position.