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Hedge Funds Are Dumping Upland Software Inc (UPLD)

Amid an overall market correction, many stocks that smart money investors were collectively bullish on tanked during the fourth quarter. Among them, Amazon and Netflix ranked among the top 30 picks and both lost around 20%. Facebook, which was the second most popular stock, lost 14% amid uncertainty regarding the interest rates and tech valuations. Nevertheless, our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Upland Software Inc (NASDAQ:UPLD) shareholders have witnessed a decrease in hedge fund sentiment recently. Our calculations also showed that UPLD isn’t among the 30 most popular stocks among hedge funds.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Richard Driehaus

We’re going to review the new hedge fund action surrounding Upland Software Inc (NASDAQ:UPLD).

How are hedge funds trading Upland Software Inc (NASDAQ:UPLD)?

At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards UPLD over the last 13 quarters. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were adding to their holdings substantially (or already accumulated large positions).

UPLD_dec2018

The largest stake in Upland Software Inc (NASDAQ:UPLD) was held by G2 Investment Partners Management, which reported holding $15.8 million worth of stock at the end of September. It was followed by Driehaus Capital with a $14.6 million position. Other investors bullish on the company included Ardsley Partners, Dorset Management, and Portolan Capital Management.

Seeing as Upland Software Inc (NASDAQ:UPLD) has faced falling interest from hedge fund managers, we can see that there was a specific group of fund managers that slashed their entire stakes heading into Q3. Interestingly, D. E. Shaw’s D E Shaw cut the biggest position of the “upper crust” of funds watched by Insider Monkey, comprising about $0.7 million in stock, and Glenn Russell Dubin’s Highbridge Capital Management was right behind this move, as the fund sold off about $0.2 million worth. These moves are important to note, as total hedge fund interest dropped by 1 funds heading into Q3.

Let’s go over hedge fund activity in other stocks similar to Upland Software Inc (NASDAQ:UPLD). We will take a look at Changyou.Com Ltd (NASDAQ:CYOU), MAG Silver Corporation (NYSE:MAG), First Foundation Inc (NASDAQ:FFWM), and Ingles Markets, Incorporated (NASDAQ:IMKTA). All of these stocks’ market caps resemble UPLD’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CYOU 6 32636 -3
MAG 13 27031 2
FFWM 13 107757 1
IMKTA 10 51584 3
Average 10.5 54752 0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 10.5 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $103 million in UPLD’s case. MAG Silver Corporation (NYSE:MAG) is the most popular stock in this table. On the other hand Changyou.Com Ltd (NASDAQ:CYOU) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Upland Software Inc (NASDAQ:UPLD) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.

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

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