Is United Community Financial Corp (UCFC) A Good Stock to Buy?

We view hedge fund activity in the stock as unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Arrowstreet Capital).

Let’s now review hedge fund activity in other stocks similar to United Community Financial Corp (NASDAQ:UCFC). We will take a look at Kadmon Holdings Inc (NYSE:KDMN), Spartan Motors Inc (NASDAQ:SPAR), Jive Software Inc (NASDAQ:JIVE), and Dorian LPG Ltd (NYSE:LPG). This group of stocks’ market caps are similar to UCFC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
KDMN 11 96607 11
SPAR 14 49536 1
JIVE 13 48850 -2
LPG 8 56727 -2

As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $63 million. That figure was $34 million in UCFC’s case. Spartan Motors Inc (NASDAQ:SPAR) is the most popular stock in this table. On the other hand Dorian LPG Ltd (NYSE:LPG) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks United Community Financial Corp (NASDAQ:UCFC) is only as popular as LPG. Considering that hedge funds aren’t fond of this stock in relation to other companies analyzed in this article, it may be a good idea to analyze it in detail and understand why the smart money isn’t behind this stock.

Disclosure: None