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 AMERCO (NASDAQ:UHAL) 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 AMERCO (NASDAQ:UHAL) a buy right now? Hedge funds are becoming more confident. The number of bullish hedge fund bets moved up by 7 in recent months. Our calculations also showed that UHAL 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).
If you’d ask most shareholders, hedge funds are viewed as unimportant, outdated financial vehicles of the past. While there are greater than 8000 funds with their doors open at the moment, Our researchers hone in on the masters of this group, around 850 funds. Most estimates calculate that this group of people have their hands on most of the smart money’s total asset base, and by following their top stock picks, Insider Monkey has unearthed numerous investment strategies that have historically outperformed Mr. Market. Insider Monkey’s flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points a year 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 .
David Abrams of Abrams Capital 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. Keeping this in mind we’re going to take a gander at the key hedge fund action surrounding AMERCO (NASDAQ:UHAL).
Hedge fund activity in AMERCO (NASDAQ:UHAL)
At Q4’s end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 70% from the third quarter of 2019. Below, you can check out the change in hedge fund sentiment towards UHAL over the last 18 quarters. So, let’s review 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, Abrams Capital Management, managed by David Abrams, holds the most valuable position in AMERCO (NASDAQ:UHAL). Abrams Capital Management has a $210.9 million position in the stock, comprising 6.6% of its 13F portfolio. Coming in second is Yacktman Asset Management, managed by Donald Yacktman, which holds a $66.7 million position; the fund has 0.8% of its 13F portfolio invested in the stock. Remaining members of the smart money that are bullish contain Cliff Asness’s AQR Capital Management, Martin Whitman’s Third Avenue Management and Clint Murray’s Lodge Hill Capital. In terms of the portfolio weights assigned to each position Abrams Capital Management allocated the biggest weight to AMERCO (NASDAQ:UHAL), around 6.55% of its 13F portfolio. Lodge Hill Capital is also relatively very bullish on the stock, designating 3.01 percent of its 13F equity portfolio to UHAL.
As one would reasonably expect, specific money managers were leading the bulls’ herd. Lodge Hill Capital, managed by Clint Murray, created the most outsized position in AMERCO (NASDAQ:UHAL). Lodge Hill Capital had $11.2 million invested in the company at the end of the quarter. Joe DiMenna’s ZWEIG DIMENNA PARTNERS also made a $6.3 million investment in the stock during the quarter. The other funds with brand new UHAL positions are Harry Gail’s Harspring Capital Management, Renaissance Technologies, and Ray Dalio’s Bridgewater Associates.
Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as AMERCO (NASDAQ:UHAL) but similarly valued. These stocks are Autoliv Inc. (NYSE:ALV), SL Green Realty Corp (NYSE:SLG), XPO Logistics Inc (NYSE:XPO), and Canopy Growth Corporation (NYSE:CGC). This group of stocks’ market valuations are similar to UHAL’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ALV | 21 | 729536 | 5 |
| SLG | 27 | 447307 | -2 |
| XPO | 32 | 2830931 | 6 |
| CGC | 14 | 42349 | 5 |
| Average | 23.5 | 1012531 | 3.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 23.5 hedge funds with bullish positions and the average amount invested in these stocks was $1013 million. That figure was $400 million in UHAL’s case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand Canopy Growth Corporation (NYSE:CGC) is the least popular one with only 14 bullish hedge fund positions. AMERCO (NASDAQ:UHAL) 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 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 beat the market by 3.2 percentage points. Unfortunately UHAL wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UHAL investors were disappointed as the stock returned -27% 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 in Q1.
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.
