Four Stocks Hedge Funds are Unloading

November 29, 2012 James Heinsman Economic Barometer

Hedge Funds Selling Certain Stocks

For a variety of reasons the following four stocks have fallen out of favor with the general community of hedge fund managers. The reasons range from the sluggish US economy; risks associated with politics and regulations; downturns in company revenues and earnings; and over dependence on earnings in the coming year.

  • Union Pacific Corporation: this company is a $58 billion market cap railroad. From July to September this year the company was owned by 8 fewer hedge funds, from 45 funds down to 37. Glenn Dubin’s Highbridge Capital Management was one of those funds that sold its stake in UPC. Perhaps these funds have been bearish in general on the US economy and wanted to limit its exposure in a company dependent on overall economic health.
  • PepsiCo, Inc: Citadel Investment Group, managed by billionaire Ken Griffin is one of the hedge funds relinquishing its shares in Pepsi. At the beginning of July Pepsi was one of Citadel’s largest investments, but due to decreased revenue and earnings it is understandable why Citadel wants to limit involvement in this stock, at least for now.
  • UnitedHealth Group Inc.: September saw the incorporation of this company into the Dow Jones Industrial Average, but over the course of that quarter hedge funds began to feel UnitedHealth was not a good investment any longer. Within three months ownership dwindled in this company from 58 hedge funds in July down to only 50 in September. A look at the company shows good valuation however in terms of recent performance and current valuation at 10 times trailing earnings. Perhaps hedge funds are skittish about upcoming political moves and regulatory risks.
  • AT&T Inc.: At the beginning of the third quarter 32 funds were holding shares in AT&T. By the end of the quarter that number dropped to 25. While it is true that the communications giant has a high dividend yield and has limited exposure to the broader indices, it is still highly dependent on improve earnings this coming year.

 

AT&T, Citadel Investment Group, Glenn Dubin, Highbridge Capital Management, Ken Griffin,

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