There are several ways to beat the market, and investing in small cap stocks has historically been one of them. We like to improve the odds of beating the market further by examining what famous hedge fund operators such as Carl Icahn and George Soros think. Those hedge fund operators make billions of dollars each year by hiring the best and the brightest to do research on stocks, including small cap stocks that big brokerage houses simply don’t cover. Because of Carl Icahn and other successful funds’ exemplary historical records, we pay attention to their small cap picks. In this article, we use hedge fund filing data to analyze United Community Banks Inc (NASDAQ:UCBI).
Is United Community Banks Inc (NASDAQ:UCBI) undervalued? Investors who are in the know seem to be getting less optimistic, as the number of long hedge fund investments among the funds tracked by Insider Monkey retreated by seven between July and September. There were 12 hedge funds in our database with UCBI positions heading into the fourth quarter. At the end of this article we will also compare UCBI to other stocks including Five Prime Therapeutics Inc (NASDAQ:FPRX), Ramco-Gershenson Properties Trust (NYSE:RPT), and Dean Foods Co (NYSE:DF) to get a better sense of its popularity.
We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.
With all of this in mind, let’s review the new action encompassing United Community Banks Inc (NASDAQ:UCBI).
What does the smart money think about United Community Banks Inc (NASDAQ:UCBI)?
At Q3’s end, a total of 12 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 37% from the previous quarter. Below, you can check out the change in hedge fund sentiment towards UCBI over the last five quarters. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
Of the funds tracked by Insider Monkey, Millennium Management, one of the 10 largest hedge funds in the world, has the number one position in United Community Banks Inc (NASDAQ:UCBI), worth close to $43 million, comprising 0.1% of its total 13F portfolio. On Millennium Management’s heels is Renaissance Technologies, led by Jim Simons, holding a $32 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Some other peers with similar optimism consist of D. E. Shaw’s D E Shaw, Fred Cummings’s Elizabeth Park Capital Management, and Ira Unschuld’s Brant Point Investment Management. 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.