Hedge funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is UGI Corp (NYSE:UGI) , so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is UGI Corp (NYSE:UGI) a buy right now? Investors who are in the know seem to be becoming less hopeful. Among the funds we track, the number of long hedge fund bets fell by two during the third quarter. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Affiliated Managers Group, Inc. (NYSE:AMG), NiSource Inc. (NYSE:NI), and Darden Restaurants, Inc. (NYSE:DRI) to gather more data points.
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Follow Ugi Corp (NYSE:UGI)
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
Keeping this in mind, we’re going to take a look at the key action encompassing UGI Corp (NYSE:UGI).
Hedge fund activity in UGI Corp (NYSE:UGI)
Heading into the fourth quarter of 2016, a total of 16 of the hedge funds tracked by Insider Monkey held long positions in UGI Corp, down by 11% from the previous quarter. The graph below displays the number of hedge funds with bullish position in UGI over the last five quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Cliff Asness’ AQR Capital Management has the biggest position in UGI Corp (NYSE:UGI), worth close to $119.5 million, corresponding to 0.2% of its total 13F portfolio. On AQR Capital Management’s heels is Diamond Hill Capital, led by Ric Dillon, holding a $99.3 million position; the fund has 0.6% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Jim Simons’ Renaissance Technologies, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and John Overdeck and David Siegel’s Two Sigma Advisors. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
Now that we’ve mentioned the most bullish investors, let’s also take a look at some funds that got rid of their entire stakes in the stock during the third quarter. At the top of the heap, First Eagle Investment Management got rid of the largest investment of the “upper crust” of funds tracked by Insider Monkey, worth close to $317 million in stock. Matthew Tewksbury’s fund, Stevens Capital Management, also dropped its stock, about $1.3 million worth.
Let’s check out hedge fund activity in other stocks similar to UGI Corp (NYSE:UGI). We will take a look at Affiliated Managers Group, Inc. (NYSE:AMG), NiSource Inc. (NYSE:NI), Darden Restaurants, Inc. (NYSE:DRI), and Atmos Energy Corporation (NYSE:ATO). All of these stocks’ market caps resemble UGI’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
As you can see these stocks had an average of 25 funds with bullish positions and the average amount invested in these stocks was $436 million, versus $311 million in UGI’s case. Affiliated Managers Group, Inc. (NYSE:AMG) is the most popular stock in this table, while Atmos Energy Corporation (NYSE:ATO) is the least popular one with only 12 bullish hedge fund positions. UGI Corp (NYSE:UGI) 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. In this regard AMG might be a better candidate to consider taking a long position in.