Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Upland Software Inc (NASDAQ:UPLD).
Is Upland Software Inc (NASDAQ:UPLD) a buy here? The best stock pickers were getting less bullish. The number of long hedge fund bets retreated by 2 in recent months. Upland Software Inc (NASDAQ:UPLD) was in 19 hedge funds’ portfolios at the end of March. The all time high for this statistic is 28. Our calculations also showed that UPLD isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery 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 we’re going to check out the recent hedge fund action encompassing Upland Software Inc (NASDAQ:UPLD).
Do Hedge Funds Think UPLD Is A Good Stock To Buy Now?
At the end of March, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of -10% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards UPLD over the last 23 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Royce & Associates was the largest shareholder of Upland Software Inc (NASDAQ:UPLD), with a stake worth $57.6 million reported as of the end of March. Trailing Royce & Associates was P2 Capital Partners, which amassed a stake valued at $50.2 million. General Equity Partners, Ardsley Partners, and G2 Investment Partners Management 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 General Equity Partners allocated the biggest weight to Upland Software Inc (NASDAQ:UPLD), around 10.73% of its 13F portfolio. Dorset Management is also relatively very bullish on the stock, dishing out 6.06 percent of its 13F equity portfolio to UPLD.
Judging by the fact that Upland Software Inc (NASDAQ:UPLD) has experienced falling interest from the aggregate hedge fund industry, we can see that there exists a select few hedgies who were dropping their full holdings last quarter. It’s worth mentioning that Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management said goodbye to the biggest position of all the hedgies watched by Insider Monkey, totaling about $23 million in stock. Dmitry Balyasny’s fund, Balyasny Asset Management, also dropped its stock, about $0.9 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 2 funds last quarter.
Let’s also examine hedge fund activity in other stocks similar to Upland Software Inc (NASDAQ:UPLD). These stocks are Conduent Incorporated (NYSE:CNDT), Frontline Ltd (NYSE:FRO), TriCo Bancshares (NASDAQ:TCBK), Pliant Therapeutics, Inc. (NASDAQ:PLRX), Mack Cali Realty Corp (NYSE:CLI), Marten Transport, Ltd (NASDAQ:MRTN), and James River Group Holdings Ltd (NASDAQ:JRVR). This group of stocks’ market valuations are similar to UPLD’s market valuation.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.4 hedge funds with bullish positions and the average amount invested in these stocks was $124 million. That figure was $225 million in UPLD’s case. Conduent Incorporated (NYSE:CNDT) is the most popular stock in this table. On the other hand TriCo Bancshares (NASDAQ:TCBK) is the least popular one with only 6 bullish hedge fund positions. Upland Software Inc (NASDAQ:UPLD) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UPLD is 64. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 23.8% in 2021 through July 16th and beat the market again by 7.7 percentage points. Unfortunately UPLD wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on UPLD were disappointed as the stock returned -20% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.