Is United Bankshares, Inc. (UBSI) Going to Burn These Hedge Funds?

Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of United Bankshares, Inc. (NASDAQ:UBSI).

Is United Bankshares, Inc. (NASDAQ:UBSI) undervalued? The smart money is in a bearish mood. The number of bullish hedge fund bets retreated by 4 lately. Our calculations also showed that UBSI isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Matthew Lindenbaum Basswood Capital

Matthew Lindenbaum of Basswood Capital

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. 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 also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a gander at the recent hedge fund action surrounding United Bankshares, Inc. (NASDAQ:UBSI).

Hedge fund activity in United Bankshares, Inc. (NASDAQ:UBSI)

At Q3’s end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -29% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UBSI over the last 17 quarters. With the smart money’s capital changing hands, there exists a few noteworthy hedge fund managers who were increasing their holdings meaningfully (or already accumulated large positions).

More specifically, Basswood Capital was the largest shareholder of United Bankshares, Inc. (NASDAQ:UBSI), with a stake worth $6.8 million reported as of the end of September. Trailing Basswood Capital was GLG Partners, which amassed a stake valued at $5.8 million. D E Shaw, Citadel Investment Group, and Balyasny Asset 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 Basswood Capital allocated the biggest weight to United Bankshares, Inc. (NASDAQ:UBSI), around 0.5% of its 13F portfolio. Navellier & Associates is also relatively very bullish on the stock, dishing out 0.15 percent of its 13F equity portfolio to UBSI.

Seeing as United Bankshares, Inc. (NASDAQ:UBSI) has experienced falling interest from the entirety of the hedge funds we track, we can see that there was a specific group of fund managers that elected to cut their full holdings heading into Q4. At the top of the heap, Israel Englander’s Millennium Management cut the biggest investment of the 750 funds watched by Insider Monkey, valued at about $2.9 million in stock. Renaissance Technologies, also cut its stock, about $1.6 million worth. These transactions are interesting, as total hedge fund interest fell by 4 funds heading into Q4.

Let’s go over hedge fund activity in other stocks similar to United Bankshares, Inc. (NASDAQ:UBSI). These stocks are Echostar Corporation (NASDAQ:SATS), Schneider National, Inc. (NYSE:SNDR), Adaptive Biotechnologies Corporation (NASDAQ:ADPT), and Switch, Inc. (NYSE:SWCH). This group of stocks’ market caps are similar to UBSI’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
SATS 29 601864 1
SNDR 17 127932 -4
ADPT 21 2018148 -17
SWCH 14 322417 1
Average 20.25 767590 -4.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 20.25 hedge funds with bullish positions and the average amount invested in these stocks was $768 million. That figure was $24 million in UBSI’s case. Echostar Corporation (NASDAQ:SATS) is the most popular stock in this table. On the other hand Switch, Inc. (NYSE:SWCH) is the least popular one with only 14 bullish hedge fund positions. Compared to these stocks United Bankshares, Inc. (NASDAQ:UBSI) is even less popular than SWCH. Hedge funds dodged a bullet by taking a bearish stance towards UBSI. Our calculations showed that the top 20 most popular hedge fund stocks returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately UBSI wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); UBSI investors were disappointed as the stock returned 0% during the fourth quarter (through the end of November) 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 70 percent of these stocks already outperformed the market so far in Q4.

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