Hedge Funds Are Selling UroGen Pharma Ltd. (URGN)

The financial regulations require hedge funds and wealthy investors that exceeded the $100 million equity holdings threshold to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings to a certain extent level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on March 31st, about a week after the S&P 500 Index bottomed. We at Insider Monkey have made an extensive database of more than 821 of those established hedge funds and famous value investors’ filings. In this article, we analyze how these elite funds and prominent investors traded UroGen Pharma Ltd. (NASDAQ:URGN) based on those filings.

UroGen Pharma Ltd. (NASDAQ:URGN) was in 7 hedge funds’ portfolios at the end of the first quarter of 2020. URGN has seen a decrease in enthusiasm from smart money lately. There were 8 hedge funds in our database with URGN holdings at the end of the previous quarter. Our calculations also showed that URGN isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).

Video: Watch our video about the top 5 most popular hedge fund stocks.

To the average investor there are a large number of methods investors employ to analyze stocks. A duo of the less known methods are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the elite investment managers can trounce their index-focused peers by a solid margin (see the details here).

William Leland Edwards of Palo Alto Investors

William Leland Edwards of Palo Alto Investors

At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, 2020’s unprecedented market conditions provide us with the highest number of trading opportunities in a decade. So we are checking out stocks recommended/scorned by legendary Bill Miller. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Keeping this in mind let’s analyze the recent hedge fund action surrounding UroGen Pharma Ltd. (NASDAQ:URGN).

What does smart money think about UroGen Pharma Ltd. (NASDAQ:URGN)?

At Q1’s end, a total of 7 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -13% from the fourth quarter of 2019. The graph below displays the number of hedge funds with bullish position in URGN over the last 18 quarters. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

The largest stake in UroGen Pharma Ltd. (NASDAQ:URGN) was held by Wildcat Capital Management, which reported holding $16.1 million worth of stock at the end of September. It was followed by Baker Bros. Advisors with a $12 million position. Other investors bullish on the company included Highline Capital Management, Prosight Capital, and Citadel Investment Group. In terms of the portfolio weights assigned to each position Wildcat Capital Management allocated the biggest weight to UroGen Pharma Ltd. (NASDAQ:URGN), around 7.31% of its 13F portfolio. Prosight Capital is also relatively very bullish on the stock, designating 1.22 percent of its 13F equity portfolio to URGN.

Judging by the fact that UroGen Pharma Ltd. (NASDAQ:URGN) has experienced declining sentiment from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of hedge funds that elected to cut their entire stakes last quarter. At the top of the heap, Steve Cohen’s Point72 Asset Management dumped the biggest stake of the 750 funds tracked by Insider Monkey, worth an estimated $7.4 million in stock, and Paul Marshall and Ian Wace’s Marshall Wace LLP was right behind this move, as the fund dumped about $0.1 million worth. These moves are intriguing to say the least, as total hedge fund interest fell by 1 funds last quarter.

Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as UroGen Pharma Ltd. (NASDAQ:URGN) but similarly valued. These stocks are Ready Capital Corporation (NYSE:RC), Digital Turbine Inc (NASDAQ:APPS), America’s Car-Mart, Inc. (NASDAQ:CRMT), and Puxin Limited (NYSE:NEW). All of these stocks’ market caps are similar to URGN’s market cap.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
RC 9 16399 -2
APPS 22 49594 2
CRMT 10 30233 -11
NEW 8 5758 0
Average 12.25 25496 -2.75

View table here if you experience formatting issues.

As you can see these stocks had an average of 12.25 hedge funds with bullish positions and the average amount invested in these stocks was $25 million. That figure was $36 million in URGN’s case. Digital Turbine Inc (NASDAQ:APPS) is the most popular stock in this table. On the other hand Puxin Limited (NYSE:NEW) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks UroGen Pharma Ltd. (NASDAQ:URGN) is even less popular than NEW. Hedge funds clearly dropped the ball on URGN as the stock delivered strong returns, though hedge funds’ consensus picks still generated respectable returns. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.9% in 2020 through June 10th and still beat the market by 14.2 percentage points. A small number of hedge funds were also right about betting on URGN as the stock returned 51.7% so far in the second quarter and outperformed the market by an even larger margin.

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Disclosure: None. This article was originally published at Insider Monkey.