United Insurance Holdings Corp (UIHC): 50% Jump in Hedge Fund Ownership; What Have They Uncovered?

We have been waiting for this for a year and finally the third quarter ended up showing a nice bump in the performance of small-cap stocks. Both the S&P 500 and Russell 2000 were up since the end of the second quarter, but small-cap stocks outperformed the large-cap stocks by double digits. This is important for hedge funds, which are big supporters of small-cap stocks, because their investors started pulling some of their capital out due to poor recent performance. It is very likely that equity hedge funds will deliver better risk adjusted returns in the second half of this year. In this article we are going to look at how this recent market trend affected the sentiment of hedge funds towards United Insurance Holdings Corp (NASDAQ:UIHC), and what that likely means for the prospects of the company and its stock.

United Insurance Holdings Corp (NASDAQ:UIHC) was in 15 hedge funds’ portfolios at the end of September. UIHC has experienced an increase in activity from the world’s largest hedge funds recently. There were 10 hedge funds in our database with UIHC holdings at the end of the previous quarter. At the end of this article we will also compare UIHC to other stocks including Agenus Inc (NASDAQ:AGEN), Golden Ocean Group Ltd (NASDAQ:GOGL), and Neuroderm Ltd (NASDAQ:NDRM) to get a better sense of its popularity.

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nito/Shutterstock.com

nito/Shutterstock.com

How are hedge funds trading United Insurance Holdings Corp (NASDAQ:UIHC)?

At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a 50% jump from the second quarter of 2016. Below, you can check out the change in hedge fund sentiment towards UIHC over the last 5 quarters, which shows a nearly 100% jump in the number of positions this year. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

HedgeFundSentimentChart

Of the funds tracked by Insider Monkey, Thomas E. Claugus’ GMT Capital has the biggest position in United Insurance Holdings Corp (NASDAQ:UIHC), worth close to $13.5 million. Coming in second is Weatherbie Capital, led by Matthew A. Weatherbie, which holds a $6.6 million position. Some other members of the smart money that hold long positions consist of Jim Simons’ Renaissance Technologies, Robert B. Gillam’s McKinley Capital Management, and Bernard Horn’s Polaris Capital Management. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

As aggregate interest increased, specific money managers were breaking ground themselves. Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, initiated the biggest position in United Insurance Holdings Corp (NASDAQ:UIHC). Arrowstreet Capital had $1.3 million invested in the company at the end of the quarter. Ken Griffin’s Citadel Investment Group also made a $0.9 million investment in the stock during the quarter. The following funds were also among the new UIHC investors: Matthew Hulsizer’s PEAK6 Capital Management, Peter Algert and Kevin Coldiron’s Algert Coldiron Investors, and Gavin Saitowitz and Cisco J. del Valle’s Springbok Capital.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as United Insurance Holdings Corp (NASDAQ:UIHC) but similarly valued. We will take a look at Agenus Inc (NASDAQ:AGEN), Golden Ocean Group Ltd (NASDAQ:GOGL), Neuroderm Ltd (NASDAQ:NDRM), and Ares Commercial Real Estate Corp (NYSE:ACRE). This group of stocks’ market caps resemble UIHC’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
AGEN 12 95788 1
GOGL 3 3343 -1
NDRM 16 120648 2
ACRE 10 9905 2

As you can see these stocks had an average of 10 hedge funds with bullish positions and the average amount invested in these stocks was $57 million. That figure was $30 million in UIHC’s case. Neuroderm Ltd (NASDAQ:NDRM) is the most popular stock in this table. On the other hand Golden Ocean Group Ltd (NASDAQ:GOGL) is the least popular one with only 3 bullish hedge fund positions. United Insurance Holdings Corp (NASDAQ:UIHC) is not the most popular stock in this group but hedge fund interest is still above average. This is a positive signal, as we’d rather spend our time researching stocks that hedge funds are piling in recently. In this regard, UIHC might be a good candidate to consider taking a long position in.

Disclosure: None