A whopping number of 13F filings filed with U.S. Securities and Exchange Commission has been processed by Insider Monkey so that individual investors can look at the overall hedge fund sentiment towards the stocks included in their watchlists. These freshly-submitted public filings disclose money managers’ equity positions as of the end of the three-month period that ended March 31st, so let’s proceed with the discussion of the hedge fund sentiment on Kura Oncology, Inc. (NASDAQ:KURA).
Is KURA a good stock to buy? Kura Oncology, Inc. (NASDAQ:KURA) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months. Kura Oncology, Inc. (NASDAQ:KURA) was in 32 hedge funds’ portfolios at the end of March. The all time high for this statistic is 43. There were 43 hedge funds in our database with KURA positions at the end of the fourth quarter. Our calculations also showed that KURA isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
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 S&P 500 ETFs by 115 percentage points since March 2017 (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.
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Do Hedge Funds Think KURA Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 32 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -26% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in KURA over the last 23 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Avoro Capital Advisors (venBio Select Advisor), managed by Behzad Aghazadeh, holds the biggest position in Kura Oncology, Inc. (NASDAQ:KURA). Avoro Capital Advisors (venBio Select Advisor) has a $113.1 million position in the stock, comprising 2% of its 13F portfolio. Sitting at the No. 2 spot is Oleg Nodelman of EcoR1 Capital, with a $104.4 million position; 4.6% of its 13F portfolio is allocated to the company. Some other peers that are bullish consist of Brandon Haley’s Holocene Advisors, Mark Lampert’s Biotechnology Value Fund / BVF Inc and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Commodore Capital allocated the biggest weight to Kura Oncology, Inc. (NASDAQ:KURA), around 5.8% of its 13F portfolio. Acuta Capital Partners is also relatively very bullish on the stock, designating 5.47 percent of its 13F equity portfolio to KURA.
Due to the fact that Kura Oncology, Inc. (NASDAQ:KURA) has witnessed bearish sentiment from the entirety of the hedge funds we track, we can see that there was a specific group of hedgies that decided to sell off their full holdings heading into Q2. Intriguingly, Bihua Chen’s Cormorant Asset Management said goodbye to the largest stake of the 750 funds tracked by Insider Monkey, comprising an estimated $21.2 million in stock, and Richard Driehaus’s Driehaus Capital was right behind this move, as the fund dumped about $8.6 million worth. These bearish behaviors are intriguing to say the least, as aggregate hedge fund interest fell by 11 funds heading into Q2.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Kura Oncology, Inc. (NASDAQ:KURA) but similarly valued. We will take a look at Vista Outdoor Inc (NYSE:VSTO), Washington Real Estate Investment Trust (NYSE:WRE), Myovant Sciences Ltd. (NYSE:MYOV), JinkoSolar Holding Co., Ltd. (NYSE:JKS), Alamo Group, Inc. (NYSE:ALG), Hope Bancorp, Inc. (NASDAQ:HOPE), and Banner Corporation (NASDAQ:BANR). All of these stocks’ market caps are similar to KURA’s market cap.
|Ticker||No of HFs with positions||Total Value of HF Positions (x1000)||Change in HF Position|
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.6 hedge funds with bullish positions and the average amount invested in these stocks was $142 million. That figure was $591 million in KURA’s case. Vista Outdoor Inc (NYSE:VSTO) is the most popular stock in this table. On the other hand Washington Real Estate Investment Trust (NYSE:WRE) is the least popular one with only 10 bullish hedge fund positions. Compared to these stocks Kura Oncology, Inc. (NASDAQ:KURA) is more popular among hedge funds. Our overall hedge fund sentiment score for KURA is 66.3. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 22.8% in 2021 through July 2nd and still beat the market by 6 percentage points. Unfortunately KURA wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on KURA were disappointed as the stock returned -25.2% since the end of the first quarter (through 7/2) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.