Hedge Funds Are Selling United Microelectronics Corp (UMC)

At Insider Monkey, we pore over the filings of nearly 873 top investment firms every quarter, a process we have now completed for the latest reporting period. The data we’ve gathered as a result gives us access to a wealth of collective knowledge based on these firms’ portfolio holdings as of June 30th. In this article, we will use that wealth of knowledge to determine whether or not United Microelectronics Corp (NYSE:UMC) makes for a good investment right now.

Is United Microelectronics Corp (NYSE:UMC) ready to rally soon? The best stock pickers were in a pessimistic mood. The number of bullish hedge fund positions were cut by 1 in recent months. United Microelectronics Corp (NYSE:UMC) was in 10 hedge funds’ portfolios at the end of June. The all time high for this statistic is 17. Our calculations also showed that UMC isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings). There were 11 hedge funds in our database with UMC positions at the end of the first quarter.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s view the new hedge fund action surrounding United Microelectronics Corp (NYSE:UMC).

Do Hedge Funds Think UMC Is A Good Stock To Buy Now?

Heading into the third quarter of 2021, a total of 10 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -9% from the first quarter of 2020. Below, you can check out the change in hedge fund sentiment towards UMC over the last 24 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Renaissance Technologies was the largest shareholder of United Microelectronics Corp (NYSE:UMC), with a stake worth $91.4 million reported as of the end of June. Trailing Renaissance Technologies was Arrowstreet Capital, which amassed a stake valued at $22.4 million. Citadel Investment Group, Navellier & Associates, and Schonfeld Strategic Advisors 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 Ovata Capital Management allocated the biggest weight to United Microelectronics Corp (NYSE:UMC), around 2.4% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, dishing out 1.05 percent of its 13F equity portfolio to UMC.

Since United Microelectronics Corp (NYSE:UMC) has experienced bearish sentiment from the smart money, we can see that there lies a certain “tier” of hedgies that slashed their positions entirely heading into Q3. Intriguingly, Israel Englander’s Millennium Management cut the biggest stake of the “upper crust” of funds tracked by Insider Monkey, comprising close to $3.2 million in stock. John Overdeck and David Siegel’s fund, Two Sigma Advisors, also dumped its stock, about $0.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest fell by 1 funds heading into Q3.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as United Microelectronics Corp (NYSE:UMC) but similarly valued. These stocks are POSCO (NYSE:PKX), Vulcan Materials Company (NYSE:VMC), United Rentals, Inc. (NYSE:URI), Dollar Tree, Inc. (NASDAQ:DLTR), NovoCure Limited (NASDAQ:NVCR), W.W. Grainger, Inc. (NYSE:GWW), and CNH Industrial NV (NYSE:CNHI). This group of stocks’ market values match UMC’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 31.7 hedge funds with bullish positions and the average amount invested in these stocks was $785 million. That figure was $141 million in UMC’s case. United Rentals, Inc. (NYSE:URI) is the most popular stock in this table. On the other hand POSCO (NYSE:PKX) is the least popular one with only 12 bullish hedge fund positions. Compared to these stocks United Microelectronics Corp (NYSE:UMC) is even less popular than PKX. Our overall hedge fund sentiment score for UMC is 21.6. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Hedge funds clearly dropped the ball on UMC as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.7% in 2021 through September 27th and still beat the market by 6.2 percentage points. A small number of hedge funds were also right about betting on UMC as the stock returned 29.9% since Q2 (through September 27th) and outperformed the market by an even larger margin.

Suggested Articles:

• 10 Best Blockchain Stocks to Buy
• 22 Largest Family Owned Businesses
• 10 Best 3D Printing and Additive Manufacturing Stocks to Buy

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