Although the masses and most of the financial media blame hedge funds for their exorbitant fee structure and disappointing performance, these investors have proved to have great stock picking abilities over the years (that's why their assets under management continue to swell). We believe hedge fund sentiment should serve as a crucial tool of an individual investor’s stock selection process, as it may offer great insights of how the brightest minds of the finance industry feel about specific stocks. After all, these people have access to smartest analysts and expensive data/information sources that individual investors can't match. So should one consider investing in UroGen Pharma Ltd. (NASDAQ:URGN)? The smart money sentiment can provide an answer to this question.
Is UroGen Pharma Ltd. (NASDAQ:URGN) a superb investment today? Hedge funds are in a bearish mood. The number of bullish hedge fund bets were trimmed by 2 in recent months. Our calculations also showed that URGN isn't among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). URGN was in 10 hedge funds' portfolios at the end of September. There were 12 hedge funds in our database with URGN holdings at the end of the previous quarter. Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
In the eyes of most investors, hedge funds are seen as unimportant, outdated financial tools of years past. While there are greater than 8000 funds in operation at the moment, We choose to focus on the elite of this club, approximately 750 funds. These money managers manage the majority of all hedge funds' total asset base, and by watching their top investments, Insider Monkey has revealed a few investment strategies that have historically outrun the S&P 500 index. Insider Monkey's flagship short hedge fund strategy surpassed the S&P 500 short ETFs by around 20 percentage points annually since its inception in May 2014. Our portfolio of short stocks lost 27.8% since February 2017 (through November 21st) even though the market was up more than 39% during the same period. We just shared a list of 7 short targets in our latest quarterly update .
[caption id="attachment_338175" align="aligncenter" width="500"] Felix Baker of Baker Bros.[/caption]
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world's largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, "I'm investing more today than I did back in early 2009." So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds' buy/sell signals. Let's take a look at the fresh hedge fund action encompassing UroGen Pharma Ltd. (NASDAQ:URGN).
What does smart money think about UroGen Pharma Ltd. (NASDAQ:URGN)?
At Q3's end, a total of 10 of the hedge funds tracked by Insider Monkey were long this stock, a change of -17% from the second quarter of 2019. On the other hand, there were a total of 13 hedge funds with a bullish position in URGN 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.
Among these funds, Wildcat Capital Management held the most valuable stake in UroGen Pharma Ltd. (NASDAQ:URGN), which was worth $25.2 million at the end of the third quarter. On the second spot was Highline Capital Management which amassed $20.9 million worth of shares. Baker Bros. Advisors, Prosight Capital, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Wildcat Capital Management allocated the biggest weight to UroGen Pharma Ltd. (NASDAQ:URGN), around 10.69% of its 13F portfolio. Prosight Capital is also relatively very bullish on the stock, setting aside 4.3 percent of its 13F equity portfolio to URGN.
Because UroGen Pharma Ltd. (NASDAQ:URGN) has faced declining sentiment from the smart money, we can see that there was a specific group of funds that slashed their positions entirely by the end of the third quarter. At the top of the heap, Mitchell Blutt's Consonance Capital Management dumped the biggest investment of the "upper crust" of funds tracked by Insider Monkey, totaling about $51.5 million in stock, and Ori Hershkovitz's Nexthera Capital was right behind this move, as the fund cut about $6.4 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest fell by 2 funds by the end of the third quarter.
Let's now review hedge fund activity in other stocks similar to UroGen Pharma Ltd. (NASDAQ:URGN). These stocks are Retrophin Inc (NASDAQ:RTRX), Viking Therapeutics, Inc. (NASDAQ:VKTX), Carter Bank & Trust (NASDAQ:CARE), and MidWestOne Financial Group, Inc. (NASDAQ:MOFG). All of these stocks' market caps match URGN's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position RTRX,18,223901,-1 VKTX,15,35723,-2 CARE,4,27685,-1 MOFG,9,12095,4 Average,11.5,74851,0 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 11.5 hedge funds with bullish positions and the average amount invested in these stocks was $75 million. That figure was $77 million in URGN's case. Retrophin Inc (NASDAQ:RTRX) is the most popular stock in this table. On the other hand Carter Bank & Trust (NASDAQ:CARE) is the least popular one with only 4 bullish hedge fund positions. UroGen Pharma Ltd. (NASDAQ:URGN) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. A small number of hedge funds were also right about betting on URGN as the stock returned 32.8% during the first two months of Q4 and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.