We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of United Therapeutics Corporation (NASDAQ:UTHR).
United Therapeutics Corporation (NASDAQ:UTHR) was in 36 hedge funds’ portfolios at the end of the fourth quarter of 2019. UTHR investors should pay attention to an increase in support from the world’s most elite money managers lately. There were 33 hedge funds in our database with UTHR positions at the end of the previous quarter. Our calculations also showed that UTHR isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings).
To most market participants, hedge funds are assumed to be unimportant, old investment vehicles of years past. While there are more than 8000 funds in operation today, Our researchers choose to focus on the leaders of this club, around 850 funds. It is estimated that this group of investors oversee bulk of the hedge fund industry’s total capital, and by keeping track of their top investments, Insider Monkey has determined many investment strategies that have historically beaten the market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points annually since its inception in March 2017. Our portfolio of short stocks lost 35.3% since February 2017 (through March 3rd) even though the market was up more than 35% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
William Leland Edwards of Palo Alto Investors
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s take a glance at the latest hedge fund action regarding United Therapeutics Corporation (NASDAQ:UTHR).
What does smart money think about United Therapeutics Corporation (NASDAQ:UTHR)?
At Q4’s end, a total of 36 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 9% from one quarter earlier. By comparison, 23 hedge funds held shares or bullish call options in UTHR a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in United Therapeutics Corporation (NASDAQ:UTHR) was held by Renaissance Technologies, which reported holding $312.2 million worth of stock at the end of September. It was followed by Palo Alto Investors with a $113.5 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and D E Shaw. In terms of the portfolio weights assigned to each position Palo Alto Investors allocated the biggest weight to United Therapeutics Corporation (NASDAQ:UTHR), around 6.25% of its 13F portfolio. Prosight Capital is also relatively very bullish on the stock, dishing out 6.23 percent of its 13F equity portfolio to UTHR.
With a general bullishness amongst the heavyweights, key money managers have jumped into United Therapeutics Corporation (NASDAQ:UTHR) headfirst. Hudson Bay Capital Management, managed by Sander Gerber, assembled the largest position in United Therapeutics Corporation (NASDAQ:UTHR). Hudson Bay Capital Management had $8.8 million invested in the company at the end of the quarter. Richard SchimeláandáLawrence Sapanski’s Cinctive Capital Management also initiated a $5.7 million position during the quarter. The other funds with brand new UTHR positions are Benjamin A. Smith’s Laurion Capital Management, Mike Vranos’s Ellington, and Paul Marshall and Ian Wace’s Marshall Wace LLP.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as United Therapeutics Corporation (NASDAQ:UTHR) but similarly valued. These stocks are ICU Medical, Inc. (NASDAQ:ICUI), Wright Medical Group N.V. (NASDAQ:WMGI), Schneider National, Inc. (NYSE:SNDR), and New Relic Inc (NYSE:NEWR). This group of stocks’ market values resemble UTHR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ICUI | 17 | 402123 | 1 |
| WMGI | 46 | 1070415 | 7 |
| SNDR | 22 | 115086 | 4 |
| NEWR | 44 | 933575 | 8 |
| Average | 32.25 | 630300 | 5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 32.25 hedge funds with bullish positions and the average amount invested in these stocks was $630 million. That figure was $1138 million in UTHR’s case. Wright Medical Group N.V. (NASDAQ:WMGI) is the most popular stock in this table. On the other hand ICU Medical, Inc. (NASDAQ:ICUI) is the least popular one with only 17 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 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 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th but still beat the market by 5.5 percentage points. Hedge funds were also right about betting on UTHR as the stock returned 2.8% during the first quarter (through March 25th) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
