The government requires hedge funds and wealthy investors with over a certain portfolio size to file a report that shows their positions at the end of every quarter. Even though it isn't the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds' positions on September 30. We at Insider Monkey have made an extensive database of more than 700 of those elite funds and prominent investors' filings. In this article, we analyze how these elite funds and prominent investors traded Kura Oncology, Inc. (NASDAQ:KURA) based on those filings.
Is Kura Oncology, Inc. (NASDAQ:KURA) ready to rally soon? Investors who are in the know are taking an optimistic view. The number of long hedge fund bets inched up by 2 lately. Our calculations also showed that KURA isn't among the 30 most popular stocks among hedge funds.
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 market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We're going to analyze the key hedge fund action encompassing Kura Oncology, Inc. (NASDAQ:KURA).
How are hedge funds trading Kura Oncology, Inc. (NASDAQ:KURA)?
At the end of the third quarter, a total of 20 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 11% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KURA over the last 13 quarters. With hedgies' sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings significantly (or already accumulated large positions).
The largest stake in Kura Oncology, Inc. (NASDAQ:KURA) was held by EcoR1 Capital, which reported holding $68.3 million worth of stock at the end of September. It was followed by Great Point Partners with a $37.1 million position. Other investors bullish on the company included Biotechnology Value Fund / BVF Inc, Partner Fund Management, and Sio Capital.
Now, key hedge funds have been driving this bullishness. Sectoral Asset Management, managed by Jerome Pfund and Michael Sjostrom, assembled the most outsized position in Kura Oncology, Inc. (NASDAQ:KURA). Sectoral Asset Management had $0.2 million invested in the company at the end of the quarter.
Let's go over hedge fund activity in other stocks similar to Kura Oncology, Inc. (NASDAQ:KURA). We will take a look at Scorpio Tankers Inc. (NYSE:STNG), Matrix Service Co (NASDAQ:MTRX), Pennsylvania Real Estate Investment Trust (NYSE:PEI), and QuinStreet Inc (NASDAQ:QNST). This group of stocks' market caps resemble KURA's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position STNG,14,62267,-1 MTRX,12,61071,1 PEI,14,59225,3 QNST,28,187309,7 Average,17,92468,2.5 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $92 million. That figure was $217 million in KURA's case. QuinStreet Inc (NASDAQ:QNST) is the most popular stock in this table. On the other hand Matrix Service Co (NASDAQ:MTRX) is the least popular one with only 12 bullish hedge fund positions. Kura Oncology, Inc. (NASDAQ:KURA) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we'd rather spend our time researching stocks that hedge funds are piling on. In this regard QNST might be a better candidate to consider a long position.
Disclosure: None. This article was originally published at Insider Monkey.