Hedge funds and other investment firms run by legendary investors like Israel Englander, Jeffrey Talpins and Ray Dalio are entrusted to manage billions of dollars of accredited investors' money because they are without peer in the resources they use to identify the best investments for their chosen investment horizon. Moreover, they are more willing to invest a greater amount of their resources in small-cap stocks than big brokerage houses, and this is often where they generate their outperformance, which is why we pay particular attention to their best ideas in this space.
Is UroGen Pharma Ltd. (NASDAQ:URGN) the right pick for your portfolio? Hedge funds are becoming more confident. The number of long hedge fund bets advanced by 5 recently. Our calculations also showed that urgn isn't among the 30 most popular stocks among hedge funds.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 30.9% through May 30, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
[caption id="attachment_745225" align="aligncenter" width="473"] Noam Gottesman, GLG Partners[/caption]
Let's take a gander at the key hedge fund action regarding UroGen Pharma Ltd. (NASDAQ:URGN).
What have hedge funds been doing with UroGen Pharma Ltd. (NASDAQ:URGN)?
At Q1's end, a total of 17 of the hedge funds tracked by Insider Monkey were long this stock, a change of 42% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards URGN over the last 15 quarters. With hedgies' positions undergoing their usual ebb and flow, there exists an "upper tier" of noteworthy hedge fund managers who were upping their stakes meaningfully (or already accumulated large positions).
Among these funds, Consonance Capital Management held the most valuable stake in UroGen Pharma Ltd. (NASDAQ:URGN), which was worth $65 million at the end of the first quarter. On the second spot was Highline Capital Management which amassed $36.5 million worth of shares. Moreover, Wildcat Capital Management, Point72 Asset Management, and GLG Partners were also bullish on UroGen Pharma Ltd. (NASDAQ:URGN), allocating a large percentage of their portfolios to this stock.
Consequently, key hedge funds were breaking ground themselves. Prosight Capital, managed by Lawrence Hawkins, initiated the largest position in UroGen Pharma Ltd. (NASDAQ:URGN). Prosight Capital had $5.8 million invested in the company at the end of the quarter. Ori Hershkovitz's Nexthera Capital also initiated a $4.9 million position during the quarter. The other funds with brand new URGN positions are Jerome Pfund and Michael Sjostrom's Sectoral Asset Management, Michael Gelband's ExodusPoint Capital, and Jim Simons's Renaissance Technologies.
Let's now review hedge fund activity in other stocks similar to UroGen Pharma Ltd. (NASDAQ:URGN). These stocks are Fidelity Southern Corporation (NASDAQ:LION), Nanometrics Incorporated (NASDAQ:NANO), Global Brass and Copper Holdings Inc (NYSE:BRSS), and WideOpenWest, Inc. (NYSE:WOW). This group of stocks' market values are closest to URGN's market value.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position LION,12,58207,3 NANO,16,101878,-3 BRSS,16,88966,1 WOW,11,21590,-2 Average,13.75,67660,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.75 hedge funds with bullish positions and the average amount invested in these stocks was $68 million. That figure was $172 million in URGN's case. Nanometrics Incorporated (NASDAQ:NANO) is the most popular stock in this table. On the other hand WideOpenWest, Inc. (NYSE:WOW) is the least popular one with only 11 bullish hedge fund positions. Compared to these stocks UroGen Pharma Ltd. (NASDAQ:URGN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately URGN wasn't nearly as popular as these 20 stocks and hedge funds that were betting on URGN were disappointed as the stock returned -4.7% during the same period 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 13 of these stocks already outperformed the market in Q2.
Disclosure: None. This article was originally published at Insider Monkey.