After several tireless days we have finished crunching the numbers from nearly 817 13F filings issued by the elite hedge funds and other investment firms that we track at Insider Monkey, which disclosed those firms’ equity portfolios as of September 30th. The results of that effort will be put on display in this article, as we share valuable insight into the smart money sentiment towards UMH Properties, Inc (NYSE:UMH).
Is UMH a good stock to buy now? Investors who are in the know were becoming hopeful. The number of bullish hedge fund bets rose by 2 in recent months. UMH Properties, Inc (NYSE:UMH) was in 8 hedge funds’ portfolios at the end of the third quarter of 2020. The all time high for this statistics is 10. Our calculations also showed that UMH 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).
Video: Watch our video about the top 5 most popular hedge fund stocks.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
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 5 best cheap stocks to buy according to Ray Dalio to identify stocks with upside potential. 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 let’s take a glance at the recent hedge fund action surrounding UMH Properties, Inc (NYSE:UMH).
How are hedge funds trading UMH Properties, Inc (NYSE:UMH)?
At the end of the third quarter, a total of 8 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 33% from the second quarter of 2020. The graph below displays the number of hedge funds with bullish position in UMH over the last 21 quarters. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).
The largest stake in UMH Properties, Inc (NYSE:UMH) was held by Rutabaga Capital Management, which reported holding $3 million worth of stock at the end of September. It was followed by GAMCO Investors with a $1.1 million position. Other investors bullish on the company included Citadel Investment Group, Marshall Wace LLP, and Winton Capital Management. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to UMH Properties, Inc (NYSE:UMH), around 1.72% of its 13F portfolio. Winton Capital Management is also relatively very bullish on the stock, setting aside 0.02 percent of its 13F equity portfolio to UMH.
Now, some big names have been driving this bullishness. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, initiated the largest position in UMH Properties, Inc (NYSE:UMH). Marshall Wace LLP had $0.7 million invested in the company at the end of the quarter. David Harding’s Winton Capital Management also initiated a $0.7 million position during the quarter. The only other fund with a brand new UMH position is Renaissance Technologies.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as UMH Properties, Inc (NYSE:UMH) but similarly valued. We will take a look at ConnectOne Bancorp Inc (NASDAQ:CNOB), Trueblue Inc (NYSE:TBI), National Energy Services Reunited Corp. (NASDAQ:NESR), MarineMax, Inc. (NYSE:HZO), XBiotech Inc. (NASDAQ:XBIT), Independence Holding Company (NYSE:IHC), and OneSpaWorld Holdings Limited (NASDAQ:OSW). This group of stocks’ market caps are closest to UMH’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 10.3 hedge funds with bullish positions and the average amount invested in these stocks was $34 million. That figure was $8 million in UMH’s case. MarineMax, Inc. (NYSE:HZO) is the most popular stock in this table. On the other hand XBiotech Inc. (NASDAQ:XBIT) is the least popular one with only 4 bullish hedge fund positions. UMH Properties, Inc (NYSE:UMH) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UMH is 42.8. 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 31.6% in 2020 through December 2nd and beat the market by 16 percentage points. A small number of hedge funds were also right about betting on UMH, though not to the same extent, as the stock returned 10% since the end of Q3 (through December 2nd) and outperformed the market.
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Disclosure: None. This article was originally published at Insider Monkey.