The 800+ hedge funds and famous money managers tracked by Insider Monkey have already compiled and submitted their 13F filings for the third quarter, which unveil their equity positions as of September 30. 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 Parcel Service, Inc. (NYSE:UPS).
Is UPS a good stock to buy now? United Parcel Service, Inc. (NYSE:UPS) shareholders have witnessed an increase in activity from the world’s largest hedge funds of late. United Parcel Service, Inc. (NYSE:UPS) was in 57 hedge funds’ portfolios at the end of September. The all time high for this statistics is 48. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that UPS 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).
Video: 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’ 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 66 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, we believe electric vehicles and energy storage are set to become giant markets. Tesla’s stock price skyrocketed, yet lithium prices are still below their 2019 highs. So, we are checking out this lithium stock right now. We go through lists like the 15 best blue chip stocks to buy 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. With all of this in mind let’s take a look at the latest hedge fund action encompassing United Parcel Service, Inc. (NYSE:UPS).
Hedge fund activity in United Parcel Service, Inc. (NYSE:UPS)
At the end of the third quarter, a total of 57 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 54% from one quarter earlier. On the other hand, there were a total of 45 hedge funds with a bullish position in UPS a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in United Parcel Service, Inc. (NYSE:UPS) was held by Bill & Melinda Gates Foundation Trust, which reported holding $754.1 million worth of stock at the end of September. It was followed by Citadel Investment Group with a $282.8 million position. Other investors bullish on the company included Tybourne Capital Management, Citadel Investment Group, and Adage Capital Management. In terms of the portfolio weights assigned to each position Masters Capital Management allocated the biggest weight to United Parcel Service, Inc. (NYSE:UPS), around 7.2% of its 13F portfolio. Tybourne Capital Management is also relatively very bullish on the stock, designating 5.02 percent of its 13F equity portfolio to UPS.
As industrywide interest jumped, key hedge funds were leading the bulls’ herd. Tybourne Capital Management, managed by Eashwar Krishnan, created the most valuable position in United Parcel Service, Inc. (NYSE:UPS). Tybourne Capital Management had $203.7 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace LLP also made a $30.2 million investment in the stock during the quarter. The following funds were also among the new UPS investors: Louis Bacon’s Moore Global Investments, Joe DiMenna’s ZWEIG DIMENNA PARTNERS, and Ed Bosek’s BeaconLight Capital.
Let’s also examine hedge fund activity in other stocks similar to United Parcel Service, Inc. (NYSE:UPS). These stocks are T-Mobile US, Inc. (NYSE:TMUS), Accenture Plc (NYSE:ACN), AstraZeneca plc (NYSE:AZN), Eli Lilly and Company (NYSE:LLY), Medtronic plc (NYSE:MDT), NextEra Energy, Inc. (NYSE:NEE), and Bristol Myers Squibb Company (NYSE:BMY). This group of stocks’ market valuations are similar to UPS’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 69 hedge funds with bullish positions and the average amount invested in these stocks was $3823 million. That figure was $1731 million in UPS’s case. Bristol Myers Squibb Company (NYSE:BMY) is the most popular stock in this table. On the other hand AstraZeneca plc (NYSE:AZN) is the least popular one with only 33 bullish hedge fund positions. United Parcel Service, Inc. (NYSE:UPS) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UPS is 53.2. 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. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 31.6% in 2020 through December 2nd and surpassed the market again by 16 percentage points. Unfortunately UPS wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UPS investors were disappointed as the stock returned 1.9% since the end of September (through 12/2) 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 most of these stocks already outperformed the market in 2020.
Disclosure: None. This article was originally published at Insider Monkey.