Hedge Funds Were Buying UGI Corp (UGI) Before The Coronavirus

Coronavirus is probably the #1 concern in investors’ minds right now. It should be. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW. We predicted that a US recession is imminent and US stocks will go down by at least 20% in the next 3-6 months. We also told you to short the market ETFs and buy long-term bonds. Investors who agreed with us and replicated these trades are up double digits whereas the market is down double digits. Our article also called for a total international travel ban to prevent the spread of the coronavirus especially from Europe. We were one step ahead of the markets and the president (10 coronavirus predictions).

In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. Keeping this in mind, let’s analyze whether UGI Corp (NYSE:UGI) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There’s no better way to get these firms’ immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.

Is UGI Corp (NYSE:UGI) a buy here? Investors who are in the know are becoming more confident. The number of long hedge fund positions rose by 1 in recent months. Our calculations also showed that UGI 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).

In the 21st century investor’s toolkit there are dozens of metrics stock market investors have at their disposal to value stocks. A couple of the most useful metrics are hedge fund and insider trading interest. Our researchers have shown that, historically, those who follow the best picks of the top hedge fund managers can trounce the broader indices by a healthy amount (see the details here).


Ken Fisher of Fisher Asset Management

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. With all of this in mind we’re going to go over the new hedge fund action surrounding UGI Corp (NYSE:UGI).

What does smart money think about UGI Corp (NYSE:UGI)?

At the end of the fourth quarter, a total of 23 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 5% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UGI over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Ric Dillon’s Diamond Hill Capital has the most valuable position in UGI Corp (NYSE:UGI), worth close to $96.2 million, comprising 0.5% of its total 13F portfolio. Coming in second is Renaissance Technologies, holding a $63.9 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining members of the smart money that hold long positions include Cliff Asness’s AQR Capital Management, Andrew Kurita’s Kettle Hill Capital Management and Noam Gottesman’s GLG Partners. In terms of the portfolio weights assigned to each position Kettle Hill Capital Management allocated the biggest weight to UGI Corp (NYSE:UGI), around 4.95% of its 13F portfolio. Blackstart Capital is also relatively very bullish on the stock, earmarking 3.28 percent of its 13F equity portfolio to UGI.

Now, key hedge funds were leading the bulls’ herd. Kettle Hill Capital Management, managed by Andrew Kurita, created the largest position in UGI Corp (NYSE:UGI). Kettle Hill Capital Management had $19.7 million invested in the company at the end of the quarter. D. E. Shaw’s D E Shaw also initiated a $5.2 million position during the quarter. The other funds with brand new UGI positions are Ali Motamed’s Invenomic Capital Management, Ken Fisher’s Fisher Asset Management, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as UGI Corp (NYSE:UGI) but similarly valued. We will take a look at Lennox International Inc. (NYSE:LII), Nordson Corporation (NASDAQ:NDSN), Coupa Software Incorporated (NASDAQ:COUP), and Whirlpool Corporation (NYSE:WHR). This group of stocks’ market caps resemble UGI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
LII 32 295284 7
NDSN 29 152005 13
COUP 55 2624527 -2
WHR 28 1045246 -3
Average 36 1029266 3.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 36 hedge funds with bullish positions and the average amount invested in these stocks was $1029 million. That figure was $290 million in UGI’s case. Coupa Software Incorporated (NASDAQ:COUP) is the most popular stock in this table. On the other hand Whirlpool Corporation (NYSE:WHR) is the least popular one with only 28 bullish hedge fund positions. Compared to these stocks UGI Corp (NYSE:UGI) is even less popular than WHR. Hedge funds dodged a bullet by taking a bearish stance towards UGI. Our calculations showed that the top 20 most popular hedge fund stocks returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 22.3% in 2020 through March 16th but managed to beat the market by 3.2 percentage points. Unfortunately UGI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); UGI investors were disappointed as the stock returned -40.2% during the same time period 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 most of these stocks already outperformed the market so far in Q1.
5 Most Popular Stocks Among Hedge Funds
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.