Is UMBF A Good Stock To Buy Now?

We at Insider Monkey have gone over 817 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article, we look at what those funds think of UMB Financial Corporation (NASDAQ:UMBF) based on that data.

Is UMBF a good stock to buy now? The best stock pickers were in an optimistic mood. The number of long hedge fund bets improved by 2 lately. UMB Financial Corporation (NASDAQ:UMBF) was in 17 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistic is 19. Our calculations also showed that UMBF isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). There were 15 hedge funds in our database with UMBF holdings at the end of June.

Video: Watch our video about the top 5 most popular hedge fund stocks.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 66 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 13% through November 17th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

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 recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks 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. Keeping this in mind we’re going to go over the recent hedge fund action encompassing UMB Financial Corporation (NASDAQ:UMBF).

Do Hedge Funds Think UMBF Is A Good Stock To Buy Now?

At the end of September, a total of 17 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in UMBF over the last 21 quarters. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

More specifically, Citadel Investment Group was the largest shareholder of UMB Financial Corporation (NASDAQ:UMBF), with a stake worth $25.5 million reported as of the end of September. Trailing Citadel Investment Group was Fisher Asset Management, which amassed a stake valued at $13.3 million. GLG Partners, Third Avenue Management, and AQR Capital 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 Third Avenue Management allocated the biggest weight to UMB Financial Corporation (NASDAQ:UMBF), around 1% of its 13F portfolio. Royce & Associates is also relatively very bullish on the stock, dishing out 0.05 percent of its 13F equity portfolio to UMBF.

As one would reasonably expect, key hedge funds were breaking ground themselves. Royce & Associates, managed by Chuck Royce, initiated the most valuable position in UMB Financial Corporation (NASDAQ:UMBF). Royce & Associates had $4.7 million invested in the company at the end of the quarter. Benjamin A. Smith’s Laurion Capital Management also initiated a $0.6 million position during the quarter. The other funds with brand new UMBF positions are Thomas Bailard’s Bailard Inc and Paul Tudor Jones’s Tudor Investment Corp.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as UMB Financial Corporation (NASDAQ:UMBF) but similarly valued. These stocks are Park Hotels & Resorts Inc. (NYSE:PK), Cornerstone OnDemand, Inc. (NASDAQ:CSOD), PJT Partners Inc (NYSE:PJT), Macquarie Infrastructure Corporation (NYSE:MIC), Umpqua Holdings Corp (NASDAQ:UMPQ), ADC Therapeutics SA (NYSE:ADCT), and DCP Midstream LP (NYSE:DCP). This group of stocks’ market valuations are closest to UMBF’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PK 17 76710 -4
CSOD 24 555427 -7
PJT 16 100618 -5
MIC 31 519679 -7
UMPQ 26 202936 2
ADCT 19 384941 4
DCP 3 5523 1
Average 19.4 263691 -2.3

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.4 hedge funds with bullish positions and the average amount invested in these stocks was $264 million. That figure was $75 million in UMBF’s case. Macquarie Infrastructure Corporation (NYSE:MIC) is the most popular stock in this table. On the other hand DCP Midstream LP (NYSE:DCP) is the least popular one with only 3 bullish hedge fund positions. UMB Financial Corporation (NASDAQ:UMBF) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UMBF is 58.8. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. A small number of hedge funds were also right about betting on UMBF as the stock returned 38.8% since the end of the third quarter (through 12/14) and outperformed the market by an even larger margin.

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