Hedge Funds Slowly Warming Up To AMERCO (UHAL)

Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the second quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 5 years and analyze what the smart money thinks of AMERCO (NASDAQ:UHAL) based on that data and determine whether they were really smart about the stock.

AMERCO (NASDAQ:UHAL) has seen an increase in activity from the world’s largest hedge funds lately. AMERCO (NASDAQ:UHAL) was in 20 hedge funds’ portfolios at the end of June. The all time high for this statistics is 28. There were 15 hedge funds in our database with UHAL positions at the end of the first quarter. Our calculations also showed that UHAL 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.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 58 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Martin Whitman Third Avenue Management Marty Whitman

Martin Whitman of Third Avenue Management

At Insider Monkey we scour multiple sources to uncover 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 and boost real estate prices. So, we are checking out this junior gold mining stock and we recommended this real estate stock to our monthly premium newsletter subscribers. 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 take a peek at the recent hedge fund action surrounding AMERCO (NASDAQ:UHAL).

Hedge fund activity in AMERCO (NASDAQ:UHAL)

Heading into the third quarter of 2020, a total of 20 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in UHAL over the last 20 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Among these funds, Abrams Capital Management held the most valuable stake in AMERCO (NASDAQ:UHAL), which was worth $169.6 million at the end of the third quarter. On the second spot was Yacktman Asset Management which amassed $62.7 million worth of shares. AQR Capital Management, JNE Partners, and Third Avenue 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 JNE Partners allocated the biggest weight to AMERCO (NASDAQ:UHAL), around 27.27% of its 13F portfolio. Abrams Capital Management is also relatively very bullish on the stock, dishing out 5.48 percent of its 13F equity portfolio to UHAL.

With a general bullishness amongst the heavyweights, key money managers have been driving this bullishness. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, established the biggest position in AMERCO (NASDAQ:UHAL). Arrowstreet Capital had $4.7 million invested in the company at the end of the quarter. Noam Gottesman’s GLG Partners also initiated a $4.6 million position during the quarter. The following funds were also among the new UHAL investors: Michael Gelband’s ExodusPoint Capital, Donald Sussman’s Paloma Partners, and Benjamin A. Smith’s Laurion Capital Management.

Let’s now take a look at hedge fund activity in other stocks similar to AMERCO (NASDAQ:UHAL). We will take a look at B2Gold Corp (NYSE:BTG), GFL Environmental Inc. (NYSE:GFL), Floor & Decor Holdings, Inc. (NYSE:FND), Voya Financial Inc (NYSE:VOYA), Thor Industries, Inc. (NYSE:THO), Berry Global Group Inc (NYSE:BERY), and Axon Enterprise, Inc. (NASDAQ:AAXN). All of these stocks’ market caps match UHAL’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
BTG 18 500334 -1
GFL 16 207198 6
FND 44 817503 21
VOYA 41 791893 9
THO 39 301565 19
BERY 40 1455029 6
AAXN 39 609333 13
Average 33.9 668979 10.4

View table here if you experience formatting issues.

As you can see these stocks had an average of 33.9 hedge funds with bullish positions and the average amount invested in these stocks was $669 million. That figure was $328 million in UHAL’s case. Floor & Decor Holdings, Inc. (NYSE:FND) is the most popular stock in this table. On the other hand GFL Environmental Inc. (NYSE:GFL) is the least popular one with only 16 bullish hedge fund positions. AMERCO (NASDAQ:UHAL) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UHAL is 31.4. 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 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 24.8% in 2020 through the end of September and still beat the market by 19.3 percentage points. A small number of hedge funds were also right about betting on UHAL as the stock returned 18% in the third quarter and outperformed the market by an even larger margin.

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