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Unit Corporation (UNT) Is Burning These Hedge Funds

“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Unit Corporation (NYSE:UNT).

Is Unit Corporation (NYSE:UNT) an excellent investment right now? The best stock pickers are becoming more confident. The number of long hedge fund bets moved up by 1 in recent months. Our calculations also showed that UNT isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). UNT was in 9 hedge funds’ portfolios at the end of September. There were 8 hedge funds in our database with UNT holdings at the end of the previous quarter.
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

To most stock holders, hedge funds are seen as underperforming, outdated financial vehicles of yesteryear. While there are greater than 8000 funds with their doors open at the moment, We choose to focus on the crème de la crème of this group, around 750 funds. These investment experts watch over the majority of all hedge funds’ total asset base, and by shadowing their inimitable picks, Insider Monkey has found many investment strategies that have historically outstripped the market. Insider Monkey’s flagship short hedge fund strategy beat the S&P 500 short ETFs by around 20 percentage points per year since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .

John Overdeck of Two Sigma

John Overdeck of Two Sigma Advisors

We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. We’re going to take a glance at the latest hedge fund action encompassing Unit Corporation (NYSE:UNT).

Hedge fund activity in Unit Corporation (NYSE:UNT)

At the end of the third quarter, a total of 9 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 13% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in UNT over the last 17 quarters. With hedge funds’ sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were upping their stakes substantially (or already accumulated large positions).

Among these funds, Renaissance Technologies held the most valuable stake in Unit Corporation (NYSE:UNT), which was worth $1.2 million at the end of the third quarter. On the second spot was Prescott Group Capital Management which amassed $1 million worth of shares. D E Shaw, Millennium Management, and Two Sigma Advisors 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 Prescott Group Capital Management allocated the biggest weight to Unit Corporation (NYSE:UNT), around 0.31% of its 13F portfolio. Paloma Partners is also relatively very bullish on the stock, designating 0.0039 percent of its 13F equity portfolio to UNT.

Now, specific money managers were breaking ground themselves. Renaissance Technologies, initiated the most valuable position in Unit Corporation (NYSE:UNT). Renaissance Technologies had $1.2 million invested in the company at the end of the quarter. Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital also initiated a $0.3 million position during the quarter. The following funds were also among the new UNT investors: Donald Sussman’s Paloma Partners and Ken Griffin’s Citadel Investment Group.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Unit Corporation (NYSE:UNT) but similarly valued. We will take a look at The Community Financial Corp (NASDAQ:TCFC), ESSA Bancorp, Inc. (NASDAQ:ESSA), Capital Bancorp, Inc. (NASDAQ:CBNK), and Applied Therapeutics, Inc. (NASDAQ:APLT). All of these stocks’ market caps are closest to UNT’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
TCFC 2 8374 0
ESSA 2 11989 0
CBNK 2 480 1
APLT 3 9808 0
Average 2.25 7663 0.25

View table here if you experience formatting issues.

As you can see these stocks had an average of 2.25 hedge funds with bullish positions and the average amount invested in these stocks was $8 million. That figure was $4 million in UNT’s case. Applied Therapeutics, Inc. (NASDAQ:APLT) is the most popular stock in this table. On the other hand The Community Financial Corp (NASDAQ:TCFC) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Unit Corporation (NYSE:UNT) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately UNT wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on UNT were disappointed as the stock returned -74.6% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.

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

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