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 Unum Group (NYSE:UNM).
Is UNM a good stock to buy now? Unum Group (NYSE:UNM) shares haven’t seen a lot of action during the second quarter. Overall, hedge fund sentiment was unchanged. The stock was in 22 hedge funds’ portfolios at the end of the third quarter of 2020. Our calculations also showed that UNM isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video for a quick look at the top 5 stocks). The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Boyd Gaming Corporation (NYSE:BYD), Cannae Holdings, Inc. (NYSE:CNNE), and South State Corporation (NASDAQ:SSB) to gather more data points.
Video: Watch our video about the top 5 most popular hedge fund stocks.
To most shareholders, hedge funds are viewed as slow, old financial vehicles of the past. While there are over 8000 funds with their doors open at the moment, Our researchers look at the elite of this club, approximately 850 funds. These investment experts manage the lion’s share of the hedge fund industry’s total capital, and by keeping an eye on their first-class investments, Insider Monkey has determined numerous investment strategies that have historically outstripped Mr. Market. Insider Monkey’s flagship short hedge fund strategy outstripped the S&P 500 short ETFs by around 20 percentage points a year since its inception in March 2017. Our portfolio of short stocks lost 13% since February 2017 (through November 17th) even though the market was up 65% during the same period. We just shared a list of 6 short targets in our latest quarterly update .
At Insider Monkey we scour multiple sources to uncover the next great investment idea. For example, Federal Reserve has been creating trillions of dollars electronically to keep the interest rates near zero. We believe this will lead to inflation and boost real estate prices. So, we recommended this real estate stock to our monthly premium newsletter subscribers. We go through lists like the 15 best blue chip stocks to pick the best large-cap stocks to buy. 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 website. Keeping this in mind we’re going to take a gander at the fresh hedge fund action encompassing Unum Group (NYSE:UNM).
Do Hedge Funds Think UNM Is A Good Stock To Buy Now?
Heading into the fourth quarter of 2020, a total of 22 of the hedge funds tracked by Insider Monkey were long this stock, a change of 0% from the second quarter of 2020. On the other hand, there were a total of 25 hedge funds with a bullish position in UNM a year ago. With hedgies’ capital changing hands, there exists an “upper tier” of notable hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).
More specifically, Arrowstreet Capital was the largest shareholder of Unum Group (NYSE:UNM), with a stake worth $72 million reported as of the end of September. Trailing Arrowstreet Capital was AQR Capital Management, which amassed a stake valued at $44.4 million. Two Sigma Advisors, Zimmer Partners, and GLG Partners 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 Algert Global allocated the biggest weight to Unum Group (NYSE:UNM), around 0.99% of its 13F portfolio. Quantinno Capital is also relatively very bullish on the stock, dishing out 0.26 percent of its 13F equity portfolio to UNM.
Judging by the fact that Unum Group (NYSE:UNM) has faced declining sentiment from hedge fund managers, we can see that there lies a certain “tier” of fund managers who sold off their positions entirely in the third quarter. It’s worth mentioning that Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners said goodbye to the largest investment of the 750 funds monitored by Insider Monkey, valued at about $1.8 million in stock, and Greg Eisner’s Engineers Gate Manager was right behind this move, as the fund dropped about $1.6 million worth. These moves are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Unum Group (NYSE:UNM) but similarly valued. We will take a look at Boyd Gaming Corporation (NYSE:BYD), Cannae Holdings, Inc. (NYSE:CNNE), South State Corporation (NASDAQ:SSB), Brooks Automation, Inc. (NASDAQ:BRKS), LiveRamp Holdings, Inc. (NYSE:RAMP), Hamilton Lane Incorporated (NASDAQ:HLNE), and Lightspeed POS Inc. (NYSE:LSPD). This group of stocks’ market values match UNM’s market value.
|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 21.7 hedge funds with bullish positions and the average amount invested in these stocks was $190 million. That figure was $202 million in UNM’s case. Cannae Holdings, Inc. (NYSE:CNNE) is the most popular stock in this table. On the other hand Lightspeed POS Inc. (NYSE:LSPD) is the least popular one with only 11 bullish hedge fund positions. Unum Group (NYSE:UNM) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for UNM is 57.6. 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 20 most popular stocks among hedge funds returned 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10 percentage points. These stocks gained 30.7% in 2020 through December 14th and still beat the market by 15.8 percentage points. Hedge funds were also right about betting on UNM as the stock returned 35.8% since the end of Q3 (through 12/14) and outperformed the market. Hedge funds were rewarded for their relative bullishness.
Disclosure: None. This article was originally published at Insider Monkey.