Were Hedge Funds Right About Souring On Union Pacific Corporation (UNP)?

We at Insider Monkey have gone over 821 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 March 31st, near the height of the coronavirus market crash. We are almost done with the second quarter. Investors decided to bet on the economic recovery and a stock market rebound. S&P 500 Index returned almost 20% this quarter. In this article we look at how hedge funds traded Union Pacific Corporation (NYSE:UNP) and determine whether the smart money was really smart about this stock.

Is Union Pacific Corporation (NYSE:UNP) undervalued? Money managers were becoming less confident. The number of bullish hedge fund bets were cut by 2 in recent months. Our calculations also showed that UNP isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks). UNP was in 63 hedge funds’ portfolios at the end of March. There were 65 hedge funds in our database with UNP holdings at the end of the previous quarter.
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Video: Watch our video about the top 5 most popular hedge fund stocks.

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 58 percentage points since March 2017 (see the details here). We were also able

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