Is UWM Holdings Corporation Class (UWMC) Going to Burn These Hedge Funds?

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 866 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of March 31st. In this article we look at what those investors think of UWM Holdings Corporation Class (NYSE:UWMC).

Is UWM Holdings Corporation Class (NYSE:UWMC) undervalued? Money managers were becoming hopeful. The number of bullish hedge fund positions improved by 19 recently. UWM Holdings Corporation Class (NYSE:UWMC) was in 19 hedge funds’ portfolios at the end of the first quarter of 2021. Our calculations also showed that UWMC isn’t among the 30 most popular stocks among hedge funds (click for Q1 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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 115 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Bart Baum of Ionic Capital Management

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, Chuck Schumer recently stated that marijuana legalization will be a Senate priority. So, we are checking out this under the radar stock that will benefit from this. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. 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 homepage. With all of this in mind we’re going to view the key hedge fund action encompassing UWM Holdings Corporation Class (NYSE:UWMC).

Do Hedge Funds Think UWMC Is A Good Stock To Buy Now?

At the end of March, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19 from one quarter earlier. On the other hand, there were a total of 0 hedge funds with a bullish position in UWMC a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Is UWMC A Good Stock To Buy?

More specifically, King Street Capital was the largest shareholder of UWM Holdings Corporation Class (NYSE:UWMC), with a stake worth $56.3 million reported as of the end of March. Trailing King Street Capital was Citadel Investment Group, which amassed a stake valued at $6.2 million. Prana Capital Management, PEAK6 Capital Management, and Ionic Capital Management 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 King Street Capital allocated the biggest weight to UWM Holdings Corporation Class (NYSE:UWMC), around 4.21% of its 13F portfolio. Ionic Capital Management is also relatively very bullish on the stock, designating 0.38 percent of its 13F equity portfolio to UWMC.

With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. King Street Capital, managed by Brian J. Higgins, initiated the most outsized position in UWM Holdings Corporation Class (NYSE:UWMC). King Street Capital had $56.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also initiated a $6.2 million position during the quarter. The other funds with brand new UWMC positions are Peter Seuss’s Prana Capital Management, Matthew Hulsizer’s PEAK6 Capital Management, and Bart Baum’s Ionic Capital Management.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as UWM Holdings Corporation Class (NYSE:UWMC) but similarly valued. We will take a look at Textron Inc. (NYSE:TXT), Masimo Corporation (NASDAQ:MASI), Teva Pharmaceutical Industries Limited (NYSE:TEVA), InterContinental Hotels Group PLC (NYSE:IHG), XPO Logistics Inc (NYSE:XPO), Snap-on Incorporated (NYSE:SNA), and C.H. Robinson Worldwide, Inc. (NASDAQ:CHRW). All of these stocks’ market caps are similar to UWMC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TXT 21 702168 -2
MASI 35 308604 6
TEVA 24 1119017 -2
IHG 8 19947 1
XPO 40 2685320 0
SNA 18 431948 -8
CHRW 23 359592 -6
Average 24.1 803799 -1.6

View table here if you experience formatting issues.

As you can see these stocks had an average of 24.1 hedge funds with bullish positions and the average amount invested in these stocks was $804 million. That figure was $77 million in UWMC’s case. XPO Logistics Inc (NYSE:XPO) is the most popular stock in this table. On the other hand InterContinental Hotels Group PLC (NYSE:IHG) is the least popular one with only 8 bullish hedge fund positions. UWM Holdings Corporation Class (NYSE:UWMC) is not the least popular stock in this group but hedge fund interest is still below average. Our overall hedge fund sentiment score for UWMC is 37.5. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 23.8% in 2021 through July 16th and surpassed the market again by 7.7 percentage points. Unfortunately UWMC wasn’t nearly as popular as these 5 stocks (hedge fund sentiment was quite bearish); UWMC investors were disappointed as the stock returned -1.7% since the end of March (through 7/16) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2021.

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Disclosure: None. This article was originally published at Insider Monkey.