Hedge Funds Are Selling UMB Financial Corporation (UMBF)

During the first half of the fourth quarter the Russell 2000 ETF (IWM) lagged the larger S&P 500 ETF (SPY) by about 4 percentage points as investors worried over the possible ramifications of rising interest rates. The hedge funds and institutional investors we track typically invest more in smaller-cap stocks than an average investor (i.e. only 298 S&P 500 constituents were among the 500 most popular stocks among hedge funds), and we have seen data that shows those funds paring back their overall exposure. Those funds cutting positions in small-caps is one reason why volatility has increased. In the following paragraphs, we take a closer look at what hedge funds and prominent investors think of UMB Financial Corporation (NASDAQ:UMBF) and see how the stock is affected by the recent hedge fund activity.

Is UMB Financial Corporation (NASDAQ:UMBF) a buy, sell, or hold? Investors who are in the know are getting less optimistic. The number of long hedge fund positions were trimmed by 1 lately. Our calculations also showed that umbf isn’t among the 30 most popular stocks among hedge funds.

If you’d ask most market participants, hedge funds are assumed to be unimportant, outdated investment tools of years past. While there are more than 8,000 funds in operation today, Our experts hone in on the aristocrats of this group, approximately 700 funds. These investment experts shepherd bulk of the hedge fund industry’s total asset base, and by keeping track of their highest performing stock picks, Insider Monkey has figured out a number of investment strategies that have historically outstripped the S&P 500 index. Insider Monkey’s flagship hedge fund strategy outrun the S&P 500 index by 6 percentage points annually since its inception in May 2014 through early November 2018. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 24% since February 2017 (through December 3rd) even though the market was up nearly 23% during the same period. We just shared a list of 11 short targets in our latest quarterly update.

John Overdeck of Two Sigma

We’re going to take a look at the key hedge fund action surrounding UMB Financial Corporation (NASDAQ:UMBF).

What have hedge funds been doing with UMB Financial Corporation (NASDAQ:UMBF)?

At the end of the third quarter, a total of 11 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -8% from one quarter earlier. By comparison, 8 hedge funds held shares or bullish call options in UMBF heading into this year. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with UMBF Positions

Among these funds, Fisher Asset Management held the most valuable stake in UMB Financial Corporation (NASDAQ:UMBF), which was worth $37.6 million at the end of the third quarter. On the second spot was Third Avenue Management which amassed $7.9 million worth of shares. Moreover, AQR Capital Management, Millennium Management, and Two Sigma Advisors were also bullish on UMB Financial Corporation (NASDAQ:UMBF), allocating a large percentage of their portfolios to this stock.

Judging by the fact that UMB Financial Corporation (NASDAQ:UMBF) has faced falling interest from hedge fund managers, it’s easy to see that there lies a certain “tier” of hedgies who were dropping their entire stakes in the third quarter. At the top of the heap, Breogan Vazquez’s Breogan Capital sold off the biggest position of the 700 funds tracked by Insider Monkey, worth about $2.1 million in stock, and Dmitry Balyasny’s Balyasny Asset Management was right behind this move, as the fund cut about $0.8 million worth. These bearish behaviors are interesting, as total hedge fund interest was cut by 1 funds in the third quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as UMB Financial Corporation (NASDAQ:UMBF) but similarly valued. These stocks are Liberty Latin America Ltd. (NASDAQ:LILAK), SM Energy Company (NYSE:SM), Uniti Group Inc. (NASDAQ:UNIT), and AngloGold Ashanti Limited (NYSE:AU). This group of stocks’ market values resemble UMBF’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LILAK 19 394253 0
SM 25 580195 3
UNIT 14 268082 -4
AU 10 193265 -2
Average 17 358949 -0.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $359 million. That figure was $54 million in UMBF’s case. SM Energy Company (NYSE:SM) is the most popular stock in this table. On the other hand AngloGold Ashanti Limited (NYSE:AU) is the least popular one with only 10 bullish hedge fund positions. UMB Financial Corporation (NASDAQ:UMBF) 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 SM might be a better candidate to consider a long position.

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