How Did Uber Technologies, Inc. (UBER) Compare Against Top Hedge Fund Stocks in 2019?

Amid an overall bull market, many stocks that smart money investors were collectively bullish on surged in 2019. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 57%. Our research shows that most of the stocks that smart money likes historically generate strong risk-adjusted returns. That’s why we weren’t surprised when hedge funds’ top 20 large-cap stock picks generated a return of 41.1% in 2019 (through December 23rd) and outperformed the broader market benchmark by 10.1 percentage points.This is why following the smart money sentiment is a useful tool at identifying the next stock to invest in.

Uber Technologies, Inc. (NYSE:UBER) has seen a decrease in hedge fund sentiment recently. UBER was in 45 hedge funds’ portfolios at the end of September. There were 56 hedge funds in our database with UBER holdings at the end of the previous quarter. Our calculations also showed that UBER isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video at the end of this article for Q2 rankings).

To the average investor there are plenty of metrics investors have at their disposal to size up their stock investments. A couple of the most under-the-radar metrics are hedge fund and insider trading moves. Our experts have shown that, historically, those who follow the best picks of the elite money managers can trounce their index-focused peers by a very impressive margin (see the details here).

Brad Gerstner Altimeter Capital

Brad Gerstner of Altimeter Capital

We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind let’s view the new hedge fund action regarding Uber Technologies, Inc. (NYSE:UBER).

Hedge fund activity in Uber Technologies, Inc. (NYSE:UBER)

At the end of the third quarter, a total of 45 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -20% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in UBER over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Among these funds, Viking Global held the most valuable stake in Uber Technologies, Inc. (NYSE:UBER), which was worth $441.8 million at the end of the third quarter. On the second spot was Altimeter Capital Management which amassed $426.6 million worth of shares. Hillhouse Capital Management, Coatue Management, and Glade Brook Capital Partners 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 Hoplite Capital Management allocated the biggest weight to Uber Technologies, Inc. (NYSE:UBER), around 100% of its 13F portfolio. Glade Brook Capital Partners is also relatively very bullish on the stock, dishing out 67.08 percent of its 13F equity portfolio to UBER.

Seeing as Uber Technologies, Inc. (NYSE:UBER) has witnessed a decline in interest from the entirety of the hedge funds we track, logic holds that there lies a certain “tier” of hedgies who were dropping their entire stakes heading into Q4. Intriguingly, Anand Parekh’s Alyeska Investment Group dropped the biggest stake of the 750 funds monitored by Insider Monkey, comprising close to $133.2 million in stock, and Josh Resnick’s Jericho Capital Asset Management was right behind this move, as the fund dropped about $92.8 million worth. These transactions are intriguing to say the least, as total hedge fund interest fell by 11 funds heading into Q4.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Uber Technologies, Inc. (NYSE:UBER) but similarly valued. We will take a look at Intercontinental Exchange Inc (NYSE:ICE), The Sherwin-Williams Company (NYSE:SHW), Marsh & McLennan Companies, Inc. (NYSE:MMC), and Illinois Tool Works Inc. (NYSE:ITW). This group of stocks’ market values resemble UBER’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ICE 43 2290732 8
SHW 45 1587764 5
MMC 26 579695 -3
ITW 28 335340 0
Average 35.5 1198383 2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 35.5 hedge funds with bullish positions and the average amount invested in these stocks was $1198 million. That figure was $3397 million in UBER’s case. The Sherwin-Williams Company (NYSE:SHW) is the most popular stock in this table. On the other hand Marsh & McLennan Companies, Inc. (NYSE:MMC) is the least popular one with only 26 bullish hedge fund positions. Uber Technologies, Inc. (NYSE:UBER) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but 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 41.1% in 2019 through December 23rd and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. Unfortunately UBER wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on UBER were disappointed as the stock returned -27% in 2019 (through December 23rd) 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 this year.
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.