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UMH Properties, Inc (UMH): Hedge Funds Are Nibbling

In this article you are going to find out whether hedge funds think UMH Properties, Inc (NYSE:UMH) is a good investment right now. We like to check what the smart money thinks first before doing extensive research on a given stock. Although there have been several high profile failed hedge fund picks, the consensus picks among hedge fund investors have historically outperformed the market after adjusting for known risk attributes. It’s not surprising given that hedge funds have access to better information and more resources to predict the winners in the stock market.

UMH Properties, Inc (NYSE:UMH) was in 5 hedge funds’ portfolios at the end of the first quarter of 2020. UMH has seen an increase in enthusiasm from smart money of late. There were 4 hedge funds in our database with UMH holdings at the end of the previous quarter. Our calculations also showed that UMH isn’t among the 30 most popular stocks among hedge funds (click for Q1 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.

Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Mario Gabelli of GAMCO Investors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s view the fresh hedge fund action surrounding UMH Properties, Inc (NYSE:UMH).

What does smart money think about UMH Properties, Inc (NYSE:UMH)?

At Q1’s end, a total of 5 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in UMH over the last 18 quarters. With hedgies’ capital changing hands, there exists a select group of noteworthy hedge fund managers who were increasing their stakes significantly (or already accumulated large positions).

The largest stake in UMH Properties, Inc (NYSE:UMH) was held by Rutabaga Capital Management, which reported holding $2.4 million worth of stock at the end of September. It was followed by GAMCO Investors with a $0.9 million position. Other investors bullish on the company included Citadel Investment Group, Arrowstreet Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Rutabaga Capital Management allocated the biggest weight to UMH Properties, Inc (NYSE:UMH), around 1.45% of its 13F portfolio. GAMCO Investors is also relatively very bullish on the stock, dishing out 0.01 percent of its 13F equity portfolio to UMH.

Now, some big names were breaking ground themselves. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in UMH Properties, Inc (NYSE:UMH). Arrowstreet Capital had $0.2 million invested in the company at the end of the quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as UMH Properties, Inc (NYSE:UMH) but similarly valued. These stocks are Morphic Holding, Inc. (NASDAQ:MORF), Zumiez Inc. (NASDAQ:ZUMZ), CBTX, Inc. (NASDAQ:CBTX), and ChampionX Corporation (NYSE:APY). This group of stocks’ market valuations are closest to UMH’s market valuation.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
MORF 7 54095 3
ZUMZ 22 28267 -2
CBTX 10 7008 2
APY 19 49368 2
Average 14.5 34685 1.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 14.5 hedge funds with bullish positions and the average amount invested in these stocks was $35 million. That figure was $5 million in UMH’s case. Zumiez Inc. (NASDAQ:ZUMZ) is the most popular stock in this table. On the other hand Morphic Holding, Inc. (NASDAQ:MORF) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks UMH Properties, Inc (NYSE:UMH) is even less popular than MORF. Hedge funds dodged a bullet by taking a bearish stance towards UMH. Our calculations showed that the top 10 most popular hedge fund stocks returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 8.3% in 2020 through the end of May but managed to beat the market by 13.2 percentage points. Unfortunately UMH wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was very bearish); UMH investors were disappointed as the stock returned 16.8% during the second quarter (through the end of May) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market so far in 2020.

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