Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of September. At Insider Monkey, we follow over 700 of the best-performing investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is Unum Group (NYSE:UNM), so let’s take a closer look at the sentiment that surrounds it in the current quarter.
Is Unum Group (NYSE:UNM) a first-rate investment now? The smart money is getting more optimistic. The number of bullish hedge fund positions advanced by 1 lately. Our calculations also showed that UNM isn’t among the 30 most popular stocks among hedge funds. UNM was in 25 hedge funds’ portfolios at the end of the third quarter of 2018. There were 24 hedge funds in our database with UNM positions at the end of the previous quarter.
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 market by 18 percentage points since May 2014 through December 3, 2018 (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.
We’re going to take a look at the fresh hedge fund action encompassing Unum Group (NYSE:UNM).
Hedge fund activity in Unum Group (NYSE:UNM)
At Q3’s end, a total of 25 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 4% from the previous quarter. The graph below displays the number of hedge funds with bullish position in UNM over the last 13 quarters. With hedgies’ capital changing hands, there exists a select group of key hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).
More specifically, AQR Capital Management was the largest shareholder of Unum Group (NYSE:UNM), with a stake worth $93.8 million reported as of the end of September. Trailing AQR Capital Management was Millennium Management, which amassed a stake valued at $53.5 million. Two Sigma Advisors, Arrowstreet Capital, and Renaissance Technologies were also very fond of the stock, giving the stock large weights in their portfolios.
Consequently, key money managers have jumped into Unum Group (NYSE:UNM) headfirst. Gruss Asset Management, managed by Howard Guberman, assembled the biggest position in Unum Group (NYSE:UNM). Gruss Asset Management had $20.5 million invested in the company at the end of the quarter. John D. Gillespie’s Prospector Partners also made a $2.9 million investment in the stock during the quarter. The other funds with brand new UNM positions are Matthew Tewksbury’s Stevens Capital Management, Ben Levine, Andrew Manuel and Stefan Renold’s LMR Partners, and George Zweig, Shane Haas and Ravi Chander’s Signition LP.
Let’s go over hedge fund activity in other stocks similar to Unum Group (NYSE:UNM). We will take a look at The Western Union Company (NYSE:WU), Alaska Air Group, Inc. (NYSE:ALK), FLIR Systems, Inc. (NASDAQ:FLIR), and IPG Photonics Corporation (NASDAQ:IPGP). This group of stocks’ market caps are closest to UNM’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WU | 20 | 667767 | -1 |
| ALK | 20 | 461660 | 1 |
| FLIR | 27 | 558828 | 1 |
| IPGP | 16 | 287166 | -3 |
| Average | 20.75 | 493855 | -0.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 20.75 hedge funds with bullish positions and the average amount invested in these stocks was $494 million. That figure was $399 million in UNM’s case. FLIR Systems, Inc. (NASDAQ:FLIR) is the most popular stock in this table. On the other hand IPG Photonics Corporation (NASDAQ:IPGP) is the least popular one with only 16 bullish hedge fund positions. Unum Group (NYSE:UNM) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard FLIR might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.
