Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 750 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Unifi, Inc. (NYSE:UFI).
Unifi, Inc. (NYSE:UFI) investors should be aware of an increase in activity from the world’s largest hedge funds lately. UFI was in 15 hedge funds’ portfolios at the end of September. There were 12 hedge funds in our database with UFI holdings at the end of the previous quarter. Our calculations also showed that UFI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most market participants, hedge funds are seen as worthless, old financial vehicles of the past. While there are greater than 8000 funds in operation at present, Our experts look at the bigwigs of this group, around 750 funds. Most estimates calculate that this group of people handle the majority of the smart money’s total asset base, and by following their finest stock picks, Insider Monkey has brought to light several investment strategies that have historically beaten the broader indices. Insider Monkey’s flagship short hedge fund strategy outperformed the S&P 500 short ETFs by around 20 percentage points a year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
Jeffrey Ubben of ValueAct Capital
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December we recommended Adams Energy based on an under-the-radar fund manager’s investor letter and the stock gained 20 percent. We’re going to review the fresh hedge fund action encompassing Unifi, Inc. (NYSE:UFI).
What have hedge funds been doing with Unifi, Inc. (NYSE:UFI)?
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were long this stock, a change of 25% from the second quarter of 2019. The graph below displays the number of hedge funds with bullish position in UFI over the last 17 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
According to Insider Monkey’s hedge fund database, Impala Asset Management, managed by Robert Bishop, holds the most valuable position in Unifi, Inc. (NYSE:UFI). Impala Asset Management has a $35.5 million position in the stock, comprising 2.6% of its 13F portfolio. The second largest stake is held by ValueAct Capital, led by Jeffrey Ubben, holding a $31.1 million position; the fund has 0.3% of its 13F portfolio invested in the stock. Some other professional money managers that hold long positions comprise Chuck Royce’s Royce & Associates, David E. Shaw’s D E Shaw and Israel Englander’s Millennium Management. In terms of the portfolio weights assigned to each position Impala Asset Management allocated the biggest weight to Unifi, Inc. (NYSE:UFI), around 2.57% of its 13F portfolio. Harvey Partners is also relatively very bullish on the stock, setting aside 0.98 percent of its 13F equity portfolio to UFI.
Now, some big names have jumped into Unifi, Inc. (NYSE:UFI) headfirst. Harvey Partners, managed by Jeffrey Moskowitz, established the biggest position in Unifi, Inc. (NYSE:UFI). Harvey Partners had $1.4 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $0.4 million position during the quarter. The other funds with brand new UFI positions are George McCabe’s Portolan Capital Management and David Harding’s Winton Capital Management.
Let’s now review hedge fund activity in other stocks similar to Unifi, Inc. (NYSE:UFI). We will take a look at Hingham Institution for Savings (NASDAQ:HIFS), Teekay Corporation (NYSE:TK), Zix Corporation (NASDAQ:ZIXI), and Summit Midstream Partners LP (NYSE:SMLP). This group of stocks’ market values match UFI’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| HIFS | 5 | 7034 | 0 |
| TK | 8 | 22795 | -5 |
| ZIXI | 19 | 67786 | 5 |
| SMLP | 1 | 78 | -3 |
| Average | 8.25 | 24423 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8.25 hedge funds with bullish positions and the average amount invested in these stocks was $24 million. That figure was $88 million in UFI’s case. Zix Corporation (NASDAQ:ZIXI) is the most popular stock in this table. On the other hand Summit Midstream Partners LP (NYSE:SMLP) is the least popular one with only 1 bullish hedge fund positions. Unifi, Inc. (NYSE:UFI) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on UFI as the stock returned 11.1% during the fourth quarter (through the end of November) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.
