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Hedge Funds Aren’t Crazy About Unitil Corporation (UTL) Anymore

In this article you are going to find out whether hedge funds think Unitil Corporation (NYSE:UTL) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

Unitil Corporation (NYSE:UTL) has seen a decrease in activity from the world’s largest hedge funds lately. UTL was in 9 hedge funds’ portfolios at the end of March. There were 12 hedge funds in our database with UTL holdings at the end of the previous quarter. Our calculations also showed that UTL isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

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. 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 58 percentage points since March 2017 (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 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Noam Gottesman GLG Partners

Noam Gottesman of GLG Partners

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, We take a look at lists like the top 15 defense contractors in the world to identify the compounders that are likely to deliver double digit returns. We interview hedge fund managers and ask them about their best ideas. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. For example we are checking out stocks recommended/scorned by legendary Bill Miller. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 in February after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s analyze the fresh hedge fund action surrounding Unitil Corporation (NYSE:UTL).

How have hedgies been trading Unitil Corporation (NYSE:UTL)?

At the end of the first quarter, a total of 9 of the hedge funds tracked by Insider Monkey were long this stock, a change of -25% from the previous quarter. On the other hand, there were a total of 10 hedge funds with a bullish position in UTL a year ago. With hedge funds’ capital changing hands, there exists a select group of key hedge fund managers who were boosting their holdings meaningfully (or already accumulated large positions).

More specifically, Renaissance Technologies was the largest shareholder of Unitil Corporation (NYSE:UTL), with a stake worth $49.4 million reported as of the end of September. Trailing Renaissance Technologies was GLG Partners, which amassed a stake valued at $2.8 million. Citadel Investment Group, Millennium Management, and Two Sigma 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 Algert Coldiron Investors allocated the biggest weight to Unitil Corporation (NYSE:UTL), around 0.18% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, setting aside 0.05 percent of its 13F equity portfolio to UTL.

Seeing as Unitil Corporation (NYSE:UTL) has experienced bearish sentiment from the smart money, it’s easy to see that there exists a select few hedgies who were dropping their full holdings in the first quarter. Intriguingly, Ian Simm’s Impax Asset Management cut the biggest position of the 750 funds followed by Insider Monkey, valued at an estimated $7.5 million in stock, and Minhua Zhang’s Weld Capital Management was right behind this move, as the fund dumped about $0.4 million worth. These moves are interesting, as total hedge fund interest was cut by 3 funds in the first quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Unitil Corporation (NYSE:UTL) but similarly valued. These stocks are Rent-A-Center Inc (NASDAQ:RCII), Coeur Mining, Inc. (NYSE:CDE), Adverum Biotechnologies, Inc. (NASDAQ:ADVM), and American Woodmark Corporation (NASDAQ:AMWD). This group of stocks’ market caps resemble UTL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RCII 19 201014 -6
CDE 14 36482 -1
ADVM 25 352608 4
AMWD 11 14493 -6
Average 17.25 151149 -2.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $151 million. That figure was $62 million in UTL’s case. Adverum Biotechnologies, Inc. (NASDAQ:ADVM) is the most popular stock in this table. On the other hand American Woodmark Corporation (NASDAQ:AMWD) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks Unitil Corporation (NYSE:UTL) is even less popular than AMWD. Hedge funds dodged a bullet by taking a bearish stance towards UTL. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd but managed to beat the market by 15.9 percentage points. Unfortunately UTL wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); UTL investors were disappointed as the stock returned -13.6% during the second quarter (through June 22nd) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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