Hedge Funds Have Never Been This Bullish On Umpqua Holdings Corp (UMPQ)

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 Umpqua Holdings Corp (NASDAQ:UMPQ) and determine whether hedge funds skillfully traded this stock.

Is Umpqua Holdings Corp (NASDAQ:UMPQ) worth your attention right now? Money managers were in an optimistic mood. The number of long hedge fund bets inched up by 1 lately. Umpqua Holdings Corp (NASDAQ:UMPQ) was in 24 hedge funds’ portfolios at the end of the second quarter of 2020. The all time high for this statistics is 23. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that UMPQ isn’t 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.

To most stock holders, hedge funds are assumed to be slow, outdated financial tools of the past. While there are greater than 8000 funds trading at present, We look at the moguls of this group, approximately 850 funds. These hedge fund managers preside over bulk of the smart money’s total asset base, and by keeping an eye on their matchless investments, Insider Monkey has deciphered several investment strategies that have historically outstripped the broader indices. Insider Monkey’s flagship short hedge fund strategy outrun the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 34% since February 2017 (through August 17th) even though the market was up 53% during the same period. We just shared a list of 8 short targets in our latest quarterly update .


Ken Griffin of Citadel Investment Group

At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, legal marijuana is one of the fastest growing industries right now, so we are checking out stock pitches like “the Starbucks of cannabis” to identify the next tenbagger. We go through lists like the 10 most profitable companies in the world 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 to get excerpts of these letters in your inbox. Now we’re going to review the key hedge fund action surrounding Umpqua Holdings Corp (NASDAQ:UMPQ).

What does smart money think about Umpqua Holdings Corp (NASDAQ:UMPQ)?

At second quarter’s end, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. On the other hand, there were a total of 20 hedge funds with a bullish position in UMPQ a year ago. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

Among these funds, Fisher Asset Management held the most valuable stake in Umpqua Holdings Corp (NASDAQ:UMPQ), which was worth $30.4 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $28.3 million worth of shares. Pzena Investment Management, Two Sigma Advisors, and Renaissance Technologies 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 Forest Hill Capital allocated the biggest weight to Umpqua Holdings Corp (NASDAQ:UMPQ), around 2.61% of its 13F portfolio. Gillson Capital is also relatively very bullish on the stock, designating 1.41 percent of its 13F equity portfolio to UMPQ.

Now, specific money managers were breaking ground themselves. ExodusPoint Capital, managed by Michael Gelband, established the most valuable position in Umpqua Holdings Corp (NASDAQ:UMPQ). ExodusPoint Capital had $2.6 million invested in the company at the end of the quarter. Israel Englander’s Millennium Management also initiated a $2 million position during the quarter. The other funds with brand new UMPQ positions are Donald Sussman’s Paloma Partners, Karim Abbadi and Edward McBride’s Centiva Capital, and Renee Yao’s Neo Ivy Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Umpqua Holdings Corp (NASDAQ:UMPQ) but similarly valued. These stocks are iRobot Corporation (NASDAQ:IRBT), LivaNova PLC (NASDAQ:LIVN), Capri Holdings Limited (NYSE:CPRI), Inari Medical, Inc. (NASDAQ:NARI), MGE Energy, Inc. (NASDAQ:MGEE), BancorpSouth Bank (NYSE:BXS), and Park Hotels & Resorts Inc. (NYSE:PK). This group of stocks’ market caps match UMPQ’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
IRBT 22 126930 3
LIVN 29 368844 5
CPRI 28 446164 -1
NARI 19 79851 19
MGEE 5 66359 -1
BXS 10 32775 -5
PK 21 90634 -5
Average 19.1 173080 2.1

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.1 hedge funds with bullish positions and the average amount invested in these stocks was $173 million. That figure was $152 million in UMPQ’s case. LivaNova PLC (NASDAQ:LIVN) is the most popular stock in this table. On the other hand MGE Energy, Inc. (NASDAQ:MGEE) is the least popular one with only 5 bullish hedge fund positions. Umpqua Holdings Corp (NASDAQ:UMPQ) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UMPQ is 75.6. 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 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 21.3% in 2020 through September 25th and beat the market by 17.7 percentage points. Unfortunately UMPQ wasn’t nearly as popular as these 10 stocks and hedge funds that were betting on UMPQ were disappointed as the stock returned 0.7% during the same time period 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 many of these stocks already outperformed the market so far this year.

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