Were Hedge Funds Right About Uber Technologies, Inc. (UBER)?


Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 900 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Uber Technologies, Inc. (NYSE:UBER) in this article.

Is Uber Technologies, Inc. (NYSE:UBER) an excellent stock to buy now? Investors who are in the know were in a pessimistic mood. The number of bullish hedge fund bets went down by 5 lately. Uber Technologies, Inc. (NYSE:UBER) was in 130 hedge funds’ portfolios at the end of the first quarter of 2021. The all time high for this statistic is 135. Our calculations also showed that UBER ranked 11th among the 30 most popular stocks among hedge funds (click for Q1 rankings).

In the eyes of most traders, hedge funds are viewed as worthless, old financial tools of yesteryear. While there are over 8000 funds with their doors open today, We choose to focus on the masters of this group, approximately 850 funds. It is estimated that this group of investors preside over most of all hedge funds’ total capital, and by shadowing their unrivaled stock picks, Insider Monkey has formulated several investment strategies that have historically defeated the broader indices. Insider Monkey’s flagship short hedge fund strategy defeated the S&P 500 short ETFs by around 20 percentage points per annum since its inception in March 2017. Also, our monthly newsletter’s portfolio of long stock picks returned 206.8% since March 2017 (through May 2021) and beat the S&P 500 Index by more than 115 percentage points. You can download a sample issue of this newsletter on our website .

COATUE MANAGEMENT

Philippe Laffont of Coatue Management

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At Insider Monkey, we scour multiple sources to uncover 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 EV 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. Keeping this in mind we’re going to take a glance at the recent hedge fund action regarding Uber Technologies, Inc. (NYSE:UBER).

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

Heading into the second quarter of 2021, a total of 130 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -4% from one quarter earlier. On the other hand, there were a total of 97 hedge funds with a bullish position in UBER 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.

Is UBER A Good Stock To Buy?

Of the funds tracked by Insider Monkey, Brad Gerstner’s Altimeter Capital Management has the most valuable position in Uber Technologies, Inc. (NYSE:UBER), worth close to $1.5487 billion, accounting for 11.1% of its total 13F portfolio. Sitting at the No. 2 spot is Tiger Global Management LLC, managed by Chase Coleman, which holds a $1.135 billion position; 2.6% of its 13F portfolio is allocated to the company. Other members of the smart money that are bullish contain Philippe Laffont’s Coatue Management, Steve Cohen’s Point72 Asset Management and Gil Simon’s SoMa Equity Partners. In terms of the portfolio weights assigned to each position Tao Capital allocated the biggest weight to Uber Technologies, Inc. (NYSE:UBER), around 19.86% of its 13F portfolio. Marathon Partners is also relatively very bullish on the stock, dishing out 19.28 percent of its 13F equity portfolio to UBER.

Since Uber Technologies, Inc. (NYSE:UBER) has faced falling interest from hedge fund managers, we can see that there is a sect of funds who were dropping their positions entirely heading into Q2. At the top of the heap, Alex Sacerdote’s Whale Rock Capital Management sold off the biggest investment of all the hedgies followed by Insider Monkey, valued at close to $341.5 million in stock. Anand Desai’s fund, Darsana Capital Partners, also cut its stock, about $191.3 million worth. These transactions are important to note, as aggregate hedge fund interest dropped by 5 funds heading into Q2.

Let’s check out hedge fund activity in other stocks similar to Uber Technologies, Inc. (NYSE:UBER). These stocks are Target Corporation (NYSE:TGT), Micron Technology, Inc. (NASDAQ:MU), CVS Health Corporation (NYSE:CVS), ServiceNow Inc (NYSE:NOW), Diageo plc (NYSE:DEO), Booking Holdings Inc. (NASDAQ:BKNG), and Advanced Micro Devices, Inc. (NASDAQ:AMD). This group of stocks’ market values match UBER’s market value.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position TGT,60,4760942,-18 MU,100,7621579,0 CVS,62,1315655,6 NOW,98,6127672,2 DEO,22,724467,-1 BKNG,103,6810305,-5 AMD,62,3703315,-12 Average,72.4,4437705,-4 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 72.4 hedge funds with bullish positions and the average amount invested in these stocks was $4438 million. That figure was $10533 million in UBER’s case. Booking Holdings Inc. (NASDAQ:BKNG) is the most popular stock in this table. On the other hand Diageo plc (NYSE:DEO) is the least popular one with only 22 bullish hedge fund positions. Compared to these stocks Uber Technologies, Inc. (NYSE:UBER) is more popular among hedge funds. Our overall hedge fund sentiment score for UBER is 93.9. 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 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 25.8% in 2021 through August 6th and still beat the market by 6.7 percentage points. Unfortunately UBER wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on UBER were disappointed as the stock returned -18.8% since the end of the first quarter (through 8/6) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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

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