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Hedge Funds Cashing Out Of Uber Technologies, Inc. (UBER)?

We know that hedge funds generate strong, risk-adjusted returns over the long run, which is why imitating the picks that they are collectively bullish on can be a profitable strategy for retail investors. With billions of dollars in assets, professional investors have to conduct complex analyses, spend many resources and use tools that are not always available for the general crowd. This doesn’t mean that they don’t have occasional colossal losses; they do. However, it is still a good idea to keep an eye on hedge fund activity. With this in mind, let’s examine the smart money sentiment towards Uber Technologies, Inc. (NYSE:UBER) and determine whether hedge funds skillfully traded this stock.

Uber Technologies, Inc. (NYSE:UBER) was in 94 hedge funds’ portfolios at the end of June. The all time high for this statistics is 97 which was achieved at the end of March. Our calculations also showed that UBER still managed to rank #25 among the 30 most popular stocks among hedge funds (click for Q2 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.

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 56 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 34% through August 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Brad Gerstner Altimeter Capital

Brad Gerstner of Altimeter Capital

At Insider Monkey we scour multiple sources to uncover the next great investment idea. Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost precious metals prices. So, we are checking out this junior gold mining stock.. We go through lists like the 10 most profitable companies in America to pick the best large-cap stocks to buy. 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. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. With all of this in mind let’s take a look at the new hedge fund action surrounding Uber Technologies, Inc. (NYSE:UBER).

What does smart money think about Uber Technologies, Inc. (NYSE:UBER)?

At the end of the second quarter, a total of 94 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -3% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UBER over the last 20 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Altimeter Capital Management held the most valuable stake in Uber Technologies, Inc. (NYSE:UBER), which was worth $898.6 million at the end of the third quarter. On the second spot was Hillhouse Capital Management which amassed $598.6 million worth of shares. Viking Global, Tiger Global Management LLC, and Citadel Investment Group 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 Glade Brook Capital Partners allocated the biggest weight to Uber Technologies, Inc. (NYSE:UBER), around 95.46% of its 13F portfolio. Tao Capital is also relatively very bullish on the stock, setting aside 44.25 percent of its 13F equity portfolio to UBER.

Due to the fact that Uber Technologies, Inc. (NYSE:UBER) has faced a decline in interest from the aggregate hedge fund industry, logic holds that there is a sect of hedgies that slashed their entire stakes in the second quarter. Interestingly, Brandon Haley’s Holocene Advisors dropped the largest stake of the 750 funds followed by Insider Monkey, totaling about $36.8 million in stock. Mark Moore’s fund, ThornTree Capital Partners, also dropped its stock, about $32.8 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 3 funds in the second quarter.

Let’s now take a look at hedge fund activity in other stocks similar to Uber Technologies, Inc. (NYSE:UBER). These stocks are Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR), CSX Corporation (NASDAQ:CSX), Air Products & Chemicals, Inc. (NYSE:APD), Vale SA (NYSE:VALE), The Sherwin-Williams Company (NYSE:SHW), Autodesk, Inc. (NASDAQ:ADSK), and Brookfield Asset Management Inc. (NYSE:BAM). All of these stocks’ market caps are closest to UBER’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PBR 29 1409778 -3
CSX 46 2290942 -11
APD 37 439684 -4
VALE 29 1613921 1
SHW 53 1830766 -4
ADSK 67 3014972 2
BAM 33 1001293 -4
Average 42 1657337 -3.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 42 hedge funds with bullish positions and the average amount invested in these stocks was $1657 million. That figure was $5389 million in UBER’s case. Autodesk, Inc. (NASDAQ:ADSK) is the most popular stock in this table. On the other hand Petroleo Brasileiro S.A. – Petrobras (NYSE:PBR) is the least popular one with only 29 bullish hedge fund positions. Compared to these stocks Uber Technologies, Inc. (NYSE:UBER) is more popular among hedge funds. Our overall hedge fund sentiment score for UBER is 81.1. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 28.2% in 2020 through August 24th and still beat the market by 20.6 percentage points. Unfortunately UBER wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on UBER were disappointed as the stock returned -0.1% since the end of the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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