Hedge Funds Have Never Been This Bullish On Uber Technologies, Inc. (UBER)

The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards Uber Technologies, Inc. (NYSE:UBER).

Is Uber Technologies, Inc. (NYSE:UBER) a good stock to buy now? The smart money was betting on the stock. The number of long hedge fund positions rose by 6 recently. Uber Technologies, Inc. (NYSE:UBER) was in 100 hedge funds’ portfolios at the end of September. The all time high for this statistics is 97. This means the bullish number of hedge fund positions in this stock reached a new all time high last quarter. Our calculations also showed that UBER ranked 19th among the 30 most popular stocks among hedge funds (click for Q3 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 has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 66 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Lei Zhang Hillhouse Capital

Lei Zhang of Hillhouse Capital Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy 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. You can subscribe to our free daily newsletter on our website. Now we’re going to take a look at the new hedge fund action encompassing Uber Technologies, Inc. (NYSE:UBER).

How have hedgies been trading Uber Technologies, Inc. (NYSE:UBER)?

At the end of September, a total of 100 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 6% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in UBER over the last 21 quarters. With the smart money’s capital changing hands, there exists a few notable hedge fund managers who were adding to their stakes significantly (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Brad Gerstner’s Altimeter Capital Management has the most valuable position in Uber Technologies, Inc. (NYSE:UBER), worth close to $1.0729 billion, comprising 18.1% of its total 13F portfolio. Coming in second is Hillhouse Capital Management, led by Lei Zhang, holding a $702.6 million position; the fund has 5.3% of its 13F portfolio invested in the stock. Other members of the smart money with similar optimism encompass Chase Coleman’s Tiger Global Management LLC, Philippe Laffont’s Coatue Management and Gil Simon’s SoMa Equity Partners. 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 96.73% of its 13F portfolio. Tao Capital is also relatively very bullish on the stock, dishing out 43.25 percent of its 13F equity portfolio to UBER.

Consequently, specific money managers have jumped into Uber Technologies, Inc. (NYSE:UBER) headfirst. Iridian Asset Management, managed by David Cohen and Harold Levy, created the most valuable position in Uber Technologies, Inc. (NYSE:UBER). Iridian Asset Management had $86.6 million invested in the company at the end of the quarter. Gavin Baker’s Atreides Management also initiated a $53.4 million position during the quarter. The other funds with brand new UBER positions are Josh Donfeld and David Rogers’s Castle Hook Partners, Bill Miller’s Miller Value Partners, and Jeff Lignelli’s Incline Global Management.

Let’s now take a look at hedge fund activity in other stocks similar to Uber Technologies, Inc. (NYSE:UBER). These stocks are The Sherwin-Williams Company (NYSE:SHW), Activision Blizzard, Inc. (NASDAQ:ATVI), Cigna Corporation (NYSE:CI), Illinois Tool Works Inc. (NYSE:ITW), NetEase, Inc (NASDAQ:NTES), VMware, Inc. (NYSE:VMW), and CME Group Inc (NASDAQ:CME). This group of stocks’ market values resemble UBER’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SHW 55 1779583 2
ATVI 93 4222431 -4
CI 62 2751729 -10
ITW 39 565865 4
NTES 45 3666807 7
VMW 31 468712 -11
CME 59 2577224 -1
Average 54.9 2290336 -1.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 54.9 hedge funds with bullish positions and the average amount invested in these stocks was $2290 million. That figure was $5979 million in UBER’s case. Activision Blizzard, Inc. (NASDAQ:ATVI) is the most popular stock in this table. On the other hand VMware, Inc. (NYSE:VMW) is the least popular one with only 31 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 91. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks returned 28.1% in 2020 through November 23rd but still managed to beat the market by 15.4 percentage points. Hedge funds were also right about betting on UBER as the stock returned 37.2% since the end of September (through 11/23) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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