Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards United Therapeutics Corporation (NASDAQ:UTHR).
Is United Therapeutics Corporation (NASDAQ:UTHR) an attractive investment today? Prominent investors were buying. The number of long hedge fund positions advanced by 6 in recent months. United Therapeutics Corporation (NASDAQ:UTHR) was in 42 hedge funds’ portfolios at the end of March. The all time high for this statistic was previously 41. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that UTHR isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 206.8% since March 2017 and outperformed the S&P 500 ETFs by more than 115 percentage points (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Bernard Horn of Polaris Capital Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation, which is why we are checking out this inflation play. We go through lists like 10 best gold stocks to buy to identify promising stocks. 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 homepage. With all of this in mind let’s check out the fresh hedge fund action regarding United Therapeutics Corporation (NASDAQ:UTHR).
Do Hedge Funds Think UTHR Is A Good Stock To Buy Now?
At the end of the first quarter, a total of 42 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 17% from the fourth quarter of 2020. Below, you can check out the change in hedge fund sentiment towards UTHR over the last 23 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in United Therapeutics Corporation (NASDAQ:UTHR), which was worth $536.5 million at the end of the fourth quarter. On the second spot was Avoro Capital Advisors (venBio Select Advisor) which amassed $501.8 million worth of shares. Palo Alto Investors, AQR Capital Management, and Consonance Capital Management 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 Consonance Capital Management allocated the biggest weight to United Therapeutics Corporation (NASDAQ:UTHR), around 9.95% of its 13F portfolio. Avoro Capital Advisors (venBio Select Advisor) is also relatively very bullish on the stock, earmarking 8.67 percent of its 13F equity portfolio to UTHR.
As one would reasonably expect, key hedge funds have been driving this bullishness. Polaris Capital Management, managed by Bernard Horn, established the most valuable position in United Therapeutics Corporation (NASDAQ:UTHR). Polaris Capital Management had $72.2 million invested in the company at the end of the quarter. Joseph Edelman’s Perceptive Advisors also initiated a $29.3 million position during the quarter. The other funds with new positions in the stock are Parsa Kiai’s Steamboat Capital Partners, Greg Martinez’s Parkman Healthcare Partners, and Israel Englander’s Millennium Management.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as United Therapeutics Corporation (NASDAQ:UTHR) but similarly valued. These stocks are ICL Group Ltd. (NYSE:ICL), Brunswick Corporation (NYSE:BC), TELUS International (Cda) Inc. (NYSE:TIXT), IAA, Inc. (NYSE:IAA), ChargePoint Holdings, Inc. (NYSE:CHPT), FLIR Systems, Inc. (NASDAQ:FLIR), and Tempur Sealy International Inc. (NYSE:TPX). This group of stocks’ market values are similar to UTHR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ICL | 4 | 43595 | -1 |
| BC | 42 | 1037373 | 6 |
| TIXT | 10 | 36105 | 10 |
| IAA | 35 | 1199081 | 0 |
| CHPT | 24 | 207630 | 24 |
| FLIR | 33 | 959692 | 5 |
| TPX | 37 | 1127729 | -6 |
| Average | 26.4 | 658744 | 5.4 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 26.4 hedge funds with bullish positions and the average amount invested in these stocks was $659 million. That figure was $2117 million in UTHR’s case. Brunswick Corporation (NYSE:BC) is the most popular stock in this table. On the other hand ICL Group Ltd. (NYSE:ICL) is the least popular one with only 4 bullish hedge fund positions. United Therapeutics Corporation (NASDAQ:UTHR) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UTHR is 90. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 17.4% in 2021 through June 18th and still beat the market by 6.1 percentage points. Hedge funds were also right about betting on UTHR, though not to the same extent, as the stock returned 6.7% since Q1 (through June 18th) and outperformed the market as well.
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Disclosure: None. This article was originally published at Insider Monkey.
