Out of thousands of stocks that are currently traded on the market, it is difficult to identify those that will really generate strong returns. Hedge funds and institutional investors spend millions of dollars on analysts with MBAs and PhDs, who are industry experts and well connected to other industry and media insiders on top of that. Individual investors can piggyback the hedge funds employing these talents and can benefit from their vast resources and knowledge in that way. We analyze quarterly 13F filings of nearly 900 hedge funds and, by looking at the smart money sentiment that surrounds a stock, we can determine whether it has the potential to beat the market over the long-term. Therefore, let’s take a closer look at what smart money thinks about Under Armour Inc (NYSE:UA).
IS UA stock a buy or sell? Under Armour Inc (NYSE:UA) has seen a decrease in support from the world’s most elite money managers lately. Under Armour Inc (NYSE:UA) was in 47 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic is 48. There were 48 hedge funds in our database with UA holdings at the end of September. Our calculations also showed that UA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell stocks to pick the next Tesla that will deliver a 10x return. 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 homepage (or at the end of this article). With all of this in mind we’re going to analyze the fresh hedge fund action regarding Under Armour Inc (NYSE:UA).
Do Hedge Funds Think UA Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in UA a year ago. With hedgies’ positions undergoing their usual ebb and flow, there exists an “upper tier” of noteworthy hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Phill Gross and Robert Atchinson’s Adage Capital Management has the most valuable position in Under Armour Inc (NYSE:UA), worth close to $243.6 million, amounting to 0.5% of its total 13F portfolio. Coming in second is Adage Capital Management, led by Phill Gross and Robert Atchinson, holding a $201.4 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Other hedge funds and institutional investors with similar optimism include Nicolai Tangen’s Ako Capital, D. E. Shaw’s D E Shaw and Philippe Laffont’s Coatue Management. In terms of the portfolio weights assigned to each position CQS Cayman LP allocated the biggest weight to Under Armour Inc (NYSE:UA), around 2.56% of its 13F portfolio. Ako Capital is also relatively very bullish on the stock, dishing out 1.7 percent of its 13F equity portfolio to UA.
Judging by the fact that Under Armour Inc (NYSE:UA) has witnessed falling interest from the smart money, it’s easy to see that there were a few money managers who sold off their entire stakes in the fourth quarter. It’s worth mentioning that Dmitry Balyasny’s Balyasny Asset Management dropped the biggest investment of the “upper crust” of funds followed by Insider Monkey, totaling an estimated $24.1 million in stock. Thomas E. Claugus’s fund, GMT Capital, also dumped its stock, about $6.1 million worth. These transactions are important to note, as total hedge fund interest was cut by 1 funds in the fourth quarter.
Let’s now review hedge fund activity in other stocks similar to Under Armour Inc (NYSE:UA). These stocks are Pan American Silver Corp. (NASDAQ:PAAS), Signature Bank (NASDAQ:SBNY), East West Bancorp, Inc. (NASDAQ:EWBC), The Middleby Corporation (NASDAQ:MIDD), TG Therapeutics Inc (NASDAQ:TGTX), Lumentum Holdings Inc (NASDAQ:LITE), and Vornado Realty Trust (NYSE:VNO). All of these stocks’ market caps match UA’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 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $542 million. That figure was $1452 million in UA’s case. Lumentum Holdings Inc (NASDAQ:LITE) is the most popular stock in this table. On the other hand Vornado Realty Trust (NYSE:VNO) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Under Armour Inc (NYSE:UA) is more popular among hedge funds. Our overall hedge fund sentiment score for UA is 83.4. 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 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks returned 5.3% in 2021 through March 19th but still managed to beat the market by 0.8 percentage points. Hedge funds were also right about betting on UA as the stock returned 29.4% since the end of December (through 3/19) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Follow Under Armour Inc. (NYSE:UA)
Follow Under Armour Inc. (NYSE:UA)
Disclosure: None. This article was originally published at Insider Monkey.