Here is What Hedge Funds Think About Urban Outfitters, Inc. (URBN)

Hedge fund managers like David Einhorn, Dan Loeb, or Carl Icahn became billionaires through reaping large profits for their investors, which is why piggybacking their stock picks may provide us with significant returns as well. Many hedge funds, like Paul Singer’s Elliott Management, are pretty secretive, but we can still get some insights by analyzing their quarterly 13F filings. One of the most fertile grounds for large abnormal returns is hedge funds’ most popular small-cap picks, which are not so widely followed and often trade at a discount to their intrinsic value. In this article we will check out hedge fund activity in another small-cap stock: Urban Outfitters, Inc. (NASDAQ:URBN).

Urban Outfitters, Inc. (NASDAQ:URBN) investors should pay attention to a decrease in hedge fund sentiment in recent months. At the end of this article, we will also compare Urban Outfitters, Inc. (NASDAQ:URBN) to other stocks, including Sun Communities Inc (NYSE:SUI), Solera Holdings Inc (NYSE:SLH), and PTC Inc (NASDAQ:PTC) to get a better sense of its popularity.

To most investors, hedge funds are assumed to be worthless, outdated investment vehicles of yesteryear. While there are more than 8000 funds trading at the moment, We look at the leaders of this club, about 700 funds. These money managers have their hands on the majority of the smart money’s total asset base, and by keeping an eye on their finest equity investments, Insider Monkey has spotted a number of investment strategies that have historically outrun Mr. Market. Insider Monkey’s small-cap hedge fund strategy surpassed the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Now, let’s go over the new action encompassing Urban Outfitters, Inc. (NASDAQ:URBN).

How have hedgies been trading Urban Outfitters, Inc. (NASDAQ:URBN)?

At the end of September, a total of 24 of the hedge funds tracked by Insider Monkey were bullish on this stock, a drop of 14% from one quarter earlier. With hedgies’ sentiment swirling, there exists a select group of notable hedge fund managers who were upping their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Joel Greenblatt’s Gotham Asset Management has the largest position in Urban Outfitters, Inc. (NASDAQ:URBN), worth close to $19.9 million, accounting for 0.2% of its total 13F portfolio. The second most bullish fund manager is Balyasny Asset Management, managed by Dmitry Balyasny, which holds a $19.8 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other members of the smart money that are bullish encompass Renaissance Technologies, Steve Pei’s Gratia Capital, and Ken Griffin’s Citadel Investment Group.

Due to the fact that Urban Outfitters, Inc. (NASDAQ:URBN) has witnessed a falling interest from the aggregate hedge fund industry, logic holds that there is a sect of funds that slashed their positions entirely by the end of the third quarter. Interestingly, Steve Cohen’s Point72 Asset Management dropped the largest stake of the 700 funds monitored by Insider Monkey, worth an estimated $40 million in stock. Clifford Fox’s fund, Columbus Circle Investors, also cut its stock, about $34.4 million worth of shares. These moves are intriguing to say the least, as total hedge fund interest fell by 4 funds by the end of the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Urban Outfitters, Inc. (NASDAQ:URBN) but similarly valued. We will take a look at Sun Communities Inc (NYSE:SUI), Solera Holdings Inc (NYSE:SLH), PTC Inc (NASDAQ:PTC), and First Niagara Financial Group Inc. (NASDAQ:FNFG). This group of stocks’ market caps is similar to Urban Outfitters, Inc. (NASDAQ:URBN)’s market cap.

As you can see, these stocks had an average of 26 hedge funds with bullish positions and the average amount invested in these stocks was $474 million. That figure was $160 million in Urban Outfitters, Inc. (NASDAQ:URBN)’s case. Solera Holdings Inc (NYSE:SLH) is the most popular stock in this table. On the other hand, Sun Communities Inc (NYSE:SUI) is the least popular one with only 6 bullish hedge fund positions. Urban Outfitters, Inc. (NASDAQ:URBN) is not the least popular stock in this group, but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard, Solera Holdings Inc (NYSE:SLH) might be a better candidate to consider a long position.