Was The Smart Money Right About Under Armour Inc (UA)?

We at Insider Monkey have gone over 887 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of December 31st. In this article, we look at what those funds think of Under Armour Inc (NYSE:UA) based on that data.

Under Armour Inc (NYSE:UA) was in 47 hedge funds’ portfolios at the end of December. The all time high for this statistic is 48. UA investors should be aware of a decrease in activity from the world’s largest hedge funds of late. There were 48 hedge funds in our database with UA holdings at the end of September. Our calculations also showed that UA isn’t among the 30 most popular stocks among hedge funds (click for Q4 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. 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 S&P 500 ETFs by 124 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 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.


Philippe Laffont of Coatue Management

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best hydrogen fuel cell 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. Now let’s take a gander at the new hedge fund action regarding Under Armour Inc (NYSE:UA).

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

At the end of the fourth quarter, a total of 47 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -2% from one quarter earlier. By comparison, 32 hedge funds held shares or bullish call options in UA a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in Under Armour Inc (NYSE:UA) was held by Adage Capital Management, which reported holding $243.6 million worth of stock at the end of December. It was followed by Adage Capital Management with a $201.4 million position. Other investors bullish on the company included Ako Capital, D E Shaw, and Coatue Management. In terms of the portfolio weights assigned to each position CQS Cayman LP allocated the biggest weight to Under Armour Inc (NYSE:UA), around 2.56% of its 13F portfolio. Ako Capital is also relatively very bullish on the stock, designating 1.7 percent of its 13F equity portfolio to UA.

Since Under Armour Inc (NYSE:UA) has witnessed bearish sentiment from the aggregate hedge fund industry, it’s safe to say that there exists a select few funds that slashed their positions entirely heading into Q1. Interestingly, Dmitry Balyasny’s Balyasny Asset Management dropped the largest stake of all the hedgies watched by Insider Monkey, totaling close to $24.1 million in stock, and Thomas E. Claugus’s GMT Capital was right behind this move, as the fund dumped about $6.1 million worth. These moves are interesting, as total hedge fund interest was cut by 1 funds heading into Q1.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Under Armour Inc (NYSE:UA) but similarly valued. We will take a look at Pan American Silver Corp. (NASDAQ:PAAS), Signature Bank (NASDAQ:SBNY), East West Bancorp, Inc. (NASDAQ:EWBC), The Middleby Corporation (NASDAQ:MIDD), TG Therapeutics Inc (NASDAQ:TGTX), Lumentum Holdings Inc (NASDAQ:LITE), and Vornado Realty Trust (NYSE:VNO). This group of stocks’ market caps are similar to UA’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
PAAS 27 466677 -1
SBNY 28 571010 -7
EWBC 24 403705 4
MIDD 30 313117 0
TGTX 38 1311739 8
LITE 39 545949 -1
VNO 23 178548 3
Average 29.9 541535 0.9

View table here if you experience formatting issues.

As you can see these stocks had an average of 29.9 hedge funds with bullish positions and the average amount invested in these stocks was $542 million. That figure was $1452 million in UA’s case. Lumentum Holdings Inc (NASDAQ:LITE) is the most popular stock in this table. On the other hand Vornado Realty Trust (NYSE:VNO) is the least popular one with only 23 bullish hedge fund positions. Compared to these stocks Under Armour Inc (NYSE:UA) is more popular among hedge funds. Our overall hedge fund sentiment score for UA is 83.4. 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 90.7% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 35 percentage points. These stocks returned 13.6% in 2021 through April 30th but still managed to beat the market by 1.6 percentage points. Hedge funds were also right about betting on UA as the stock returned 33.8% since the end of December (through 4/30) and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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