Hedge Funds Are Selling United Microelectronics Corporation (UMC)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find write-ups about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves and analyze what the smart money thinks of United Microelectronics Corporation (NYSE:UMC) based on that data.

Is United Microelectronics Corporation (NYSE:UMC) the right pick for your portfolio? Hedge funds are selling. The number of long hedge fund bets decreased by 3 recently. Our calculations also showed that UMC isn’t among the 30 most popular stocks among hedge funds.

In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s flagship best performing hedge funds strategy returned 25.8% year to date (through May 30th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 40 percentage points since its inception (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.

Michael Hintze CQS Capital

Unlike some fund managers who are betting on Dow reaching 40000 in a year, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to go over the fresh hedge fund action encompassing United Microelectronics Corporation (NYSE:UMC).

How are hedge funds trading United Microelectronics Corporation (NYSE:UMC)?

Heading into the third quarter of 2019, a total of 12 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from the first quarter of 2019. On the other hand, there were a total of 12 hedge funds with a bullish position in UMC a year ago. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were upping their holdings substantially (or already accumulated large positions).

No of Hedge Funds with UMC Positions

Among these funds, LMR Partners held the most valuable stake in United Microelectronics Corporation (NYSE:UMC), which was worth $39.6 million at the end of the second quarter. On the second spot was Renaissance Technologies which amassed $37.6 million worth of shares. Moreover, Arrowstreet Capital, OZ Management, and CQS Cayman LP were also bullish on United Microelectronics Corporation (NYSE:UMC), allocating a large percentage of their portfolios to this stock.

Judging by the fact that United Microelectronics Corporation (NYSE:UMC) has faced bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there were a few fund managers that elected to cut their full holdings heading into Q3. Interestingly, Simon Sadler’s Segantii Capital dropped the biggest stake of the 750 funds watched by Insider Monkey, worth close to $0.9 million in stock. Nick Thakore’s fund, Diametric Capital, also dumped its stock, about $0.1 million worth. These bearish behaviors are important to note, as total hedge fund interest was cut by 3 funds heading into Q3.

Let’s go over hedge fund activity in other stocks similar to United Microelectronics Corporation (NYSE:UMC). These stocks are CACI International Inc (NYSE:CACI), LendingTree, Inc (NASDAQ:TREE), Cronos Group Inc. (NASDAQ:CRON), and Insperity Inc (NYSE:NSP). All of these stocks’ market caps are similar to UMC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
CACI 29 393234 16
TREE 28 142128 11
CRON 8 25378 1
NSP 24 391193 0
Average 22.25 237983 7

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.25 hedge funds with bullish positions and the average amount invested in these stocks was $238 million. That figure was $101 million in UMC’s case. CACI International Inc (NYSE:CACI) is the most popular stock in this table. On the other hand Cronos Group Inc. (NASDAQ:CRON) is the least popular one with only 8 bullish hedge fund positions. United Microelectronics Corporation (NYSE:UMC) 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately UMC wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UMC investors were disappointed as the stock returned -1.4% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks (view the video below) among hedge funds as many of these stocks already outperformed the market so far in 2019.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

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