Hedge Funds Have Never Been This Bullish On Universal Corporation (UVV)

We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds’ top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Universal Corporation (NYSE:UVV).

Is Universal Corporation (NYSE:UVV) a buy right now? The smart money is taking a bullish view. The number of bullish hedge fund bets inched up by 1 in recent months. Our calculations also showed that UVV isn’t among the 30 most popular stocks among hedge funds (see the video below). UVV was in 18 hedge funds’ portfolios at the end of June. There were 17 hedge funds in our database with UVV positions at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Today there are numerous gauges stock traders can use to assess their holdings. Some of the best gauges are hedge fund and insider trading interest. Our experts have shown that, historically, those who follow the top picks of the best money managers can outperform the broader indices by a superb amount (see the details here).

Noam Gottesman GLG Partners

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to take a look at the new hedge fund action surrounding Universal Corporation (NYSE:UVV).

What have hedge funds been doing with Universal Corporation (NYSE:UVV)?

At the end of the second quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the first quarter of 2019. On the other hand, there were a total of 17 hedge funds with a bullish position in UVV a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

No of Hedge Funds with UVV Positions

According to Insider Monkey’s hedge fund database, Renaissance Technologies holds the largest position in Universal Corporation (NYSE:UVV). Renaissance Technologies has a $57.9 million position in the stock, comprising 0.1% of its 13F portfolio. The second most bullish fund manager is Richard S. Pzena of Pzena Investment Management, with a $36.6 million position; the fund has 0.2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors that hold long positions contain Cliff Asness’s AQR Capital Management, Ken Griffin’s Citadel Investment Group and Noam Gottesman’s GLG Partners.

Consequently, specific money managers have jumped into Universal Corporation (NYSE:UVV) headfirst. Algert Coldiron Investors, managed by Peter Algert and Kevin Coldiron, initiated the most outsized position in Universal Corp (NYSE:UVV). Algert Coldiron Investors had $3 million invested in the company at the end of the quarter. Roger Ibbotson’s Zebra Capital Management also made a $0.4 million investment in the stock during the quarter. The other funds with brand new UVV positions are Mike Vranos’s Ellington, John Overdeck and David Siegel’s Two Sigma Advisors, and Matthew Hulsizer’s PEAK6 Capital Management.

Let’s also examine hedge fund activity in other stocks similar to Universal Corporation (NYSE:UVV). We will take a look at Skyline Champion Corporation (NYSE:SKY), Tanger Factory Outlet Centers Inc. (NYSE:SKT), Arch Coal, Inc. (NYSE:ARCH), and Ebix Inc (NASDAQ:EBIX). This group of stocks’ market caps are closest to UVV’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SKY 25 258382 1
SKT 14 85927 -1
ARCH 27 364937 -1
EBIX 18 158386 -4
Average 21 216908 -1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 21 hedge funds with bullish positions and the average amount invested in these stocks was $217 million. That figure was $118 million in UVV’s case. Arch Coal, Inc. (NYSE:ARCH) is the most popular stock in this table. On the other hand Tanger Factory Outlet Centers Inc. (NYSE:SKT) is the least popular one with only 14 bullish hedge fund positions. Universal Corporation (NYSE:UVV) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately UVV wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UVV investors were disappointed as the stock returned -8.7% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far in 2019.

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