The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the fourth quarter, which unveil their equity positions as of December 31st. We went through these filings, fixed typos and other more significant errors and identified the changes in hedge fund portfolios. Our extensive review of these public filings is finally over, so this article is set to reveal the smart money sentiment towards United Rentals, Inc. (NYSE:URI).
Is United Rentals (URI) stock a buy or sell? The smart money was in an optimistic mood. The number of long hedge fund bets inched up by 6 recently. United Rentals, Inc. (NYSE:URI) was in 46 hedge funds’ portfolios at the end of December. The all time high for this statistic is 59. Our calculations also showed that URI isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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’ 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 124 percentage points since March 2017 (see the details here).
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Do Hedge Funds Think URI Is A Good Stock To Buy Now?
Heading into the first quarter of 2021, a total of 46 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 15% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in URI over the last 22 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Lyrical Asset Management was the largest shareholder of United Rentals, Inc. (NYSE:URI), with a stake worth $407.8 million reported as of the end of December. Trailing Lyrical Asset Management was Pelham Capital, which amassed a stake valued at $187.3 million. Theleme Partners, Citadel Investment Group, and Renaissance Technologies 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 Pelham Capital allocated the biggest weight to United Rentals, Inc. (NYSE:URI), around 12.4% of its 13F portfolio. Lyrical Asset Management is also relatively very bullish on the stock, earmarking 5.63 percent of its 13F equity portfolio to URI.
As industrywide interest jumped, specific money managers were leading the bulls’ herd. Pelham Capital, managed by Ross Turner, created the most outsized position in United Rentals, Inc. (NYSE:URI). Pelham Capital had $187.3 million invested in the company at the end of the quarter. Renaissance Technologies also initiated a $41.3 million position during the quarter. The other funds with new positions in the stock are Ken Heebner’s Capital Growth Management, Brian Ashford-Russell and Tim Woolley’s Polar Capital, and Phill Gross and Robert Atchinson’s Adage Capital Management.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as United Rentals, Inc. (NYSE:URI) but similarly valued. We will take a look at Halliburton Company (NYSE:HAL), Trimble Inc. (NASDAQ:TRMB), Zendesk Inc (NYSE:ZEN), Energy Transfer L.P. (NYSE:ET), HEICO Corporation (NYSE:HEI), Invitation Homes Inc. (NYSE:INVH), and FirstEnergy Corp. (NYSE:FE). This group of stocks’ market valuations resemble URI’s market valuation.
|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 36.6 hedge funds with bullish positions and the average amount invested in these stocks was $1098 million. That figure was $1061 million in URI’s case. Zendesk Inc (NYSE:ZEN) is the most popular stock in this table. On the other hand Trimble Inc. (NASDAQ:TRMB) is the least popular one with only 21 bullish hedge fund positions. United Rentals, Inc. (NYSE:URI) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for URI is 67.2. 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 gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Hedge funds were also right about betting on URI as the stock returned 36.3% since the end of Q4 (through 3/19) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
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Disclosure: None. This article was originally published at Insider Monkey.