We are still in an overall bull market and many stocks that smart money investors were piling into surged through October 17th. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 45% and 39% respectively. Hedge funds' top 3 stock picks returned 34.4% this year and beat the S&P 500 ETFs by 13 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That's why we believe it isn't a waste of time to check out hedge fund sentiment before you invest in a stock like Kura Oncology, Inc. (NASDAQ:KURA).
Is Kura Oncology, Inc. (NASDAQ:KURA) a buy here? Investors who are in the know are taking an optimistic view. The number of bullish hedge fund bets advanced by 5 in recent months. Our calculations also showed that KURA isn't among the 30 most popular stocks among hedge funds (see the video below). Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
According to most stock holders, hedge funds are viewed as unimportant, outdated financial tools of years past. While there are over 8000 funds in operation today, Our researchers choose to focus on the leaders of this club, about 750 funds. Most estimates calculate that this group of people oversee most of the hedge fund industry's total asset base, and by tailing their highest performing investments, Insider Monkey has come up with numerous investment strategies that have historically outpaced the S&P 500 index. Insider Monkey's flagship hedge fund strategy surpassed the S&P 500 index by around 5 percentage points a year since its inception in May 2014. We were able to generate large returns even by identifying short candidates. Our portfolio of short stocks lost 25.7% since February 2017 (through September 30th) even though the market was up more than 33% during the same period. We just shared a list of 10 short targets in our latest quarterly update .
In addition to following the biggest hedge funds for investment ideas, we also share stock pitches from conferences, investor letters and other sources like this one where the fund manager is talking about two under the radar 1000% return potential stocks: first one in internet infrastructure and the second in the heart of advertising market. We use hedge fund buy/sell signals to determine whether to conduct in-depth analysis of these stock ideas which take days. Now we're going to take a peek at the fresh hedge fund action surrounding Kura Oncology, Inc. (NASDAQ:KURA).
What does smart money think about Kura Oncology, Inc. (NASDAQ:KURA)?
At the end of the second quarter, a total of 22 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 29% from the first quarter of 2019. By comparison, 18 hedge funds held shares or bullish call options in KURA a year ago. So, let's see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, EcoR1 Capital was the largest shareholder of Kura Oncology, Inc. (NASDAQ:KURA), with a stake worth $103.9 million reported as of the end of March. Trailing EcoR1 Capital was Great Point Partners, which amassed a stake valued at $60 million. Biotechnology Value Fund / BVF Inc, Cormorant Asset Management, and Prosight Capital were also very fond of the stock, giving the stock large weights in their portfolios.
Now, specific money managers were breaking ground themselves. Driehaus Capital, managed by Richard Driehaus, assembled the biggest position in Kura Oncology, Inc. (NASDAQ:KURA). Driehaus Capital had $7 million invested in the company at the end of the quarter. Ken Griffin's Citadel Investment Group also made a $5.9 million investment in the stock during the quarter. The other funds with brand new KURA positions are D. E. Shaw's D E Shaw, Benjamin A. Smith's Laurion Capital Management, and Peter Muller's PDT Partners.
Let's now review hedge fund activity in other stocks - not necessarily in the same industry as Kura Oncology, Inc. (NASDAQ:KURA) but similarly valued. These stocks are Univest Financial Corporation (NASDAQ:UVSP), Federal Agricultural Mortgage Corp. (NYSE:AGM), TrustCo Bank Corp NY (NASDAQ:TRST), and Opus Bank (NASDAQ:OPB). This group of stocks' market caps are closest to KURA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position UVSP,9,42023,0 AGM,7,29670,-2 TRST,12,46609,2 OPB,9,138307,-2 Average,9.25,64152,-0.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $64 million. That figure was $290 million in KURA's case. TrustCo Bank Corp NY (NASDAQ:TRST) is the most popular stock in this table. On the other hand Federal Agricultural Mortgage Corp. (NYSE:AGM) is the least popular one with only 7 bullish hedge fund positions. Compared to these stocks Kura Oncology, Inc. (NASDAQ:KURA) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Unfortunately KURA wasn't nearly as popular as these 20 stocks and hedge funds that were betting on KURA were disappointed as the stock returned -23% during the third quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market in Q3.
Disclosure: None. This article was originally published at Insider Monkey.