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Urban Outfitters, Inc. (URBN): Hedge Funds Are Selling, But Sentiment Still Very Bullish

The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have gone over 730 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of June 28th. In this article we look at what those investors think of Urban Outfitters, Inc. (NASDAQ:URBN).

Urban Outfitters, Inc. (NASDAQ:URBN) has seen a decrease in support from the world’s most elite money managers recently. Our calculations also showed that URBN isn’t among the 30 most popular stocks among hedge funds (see the video below).
5 Most Popular Stocks Among Hedge Funds
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.

In today’s marketplace there are dozens of methods stock traders can use to grade stocks. A pair of the less known methods are hedge fund and insider trading indicators. Our experts have shown that, historically, those who follow the best picks of the best hedge fund managers can beat the S&P 500 by a solid margin (see the details here).

URBN_oct2019

Unlike former hedge manager, Dr. Steve Sjuggerud, who is convinced Dow will soar past 40000, our long-short investment strategy doesn’t rely on bull markets to deliver double digit returns. We only rely on hedge fund buy/sell signals. We’re going to view the new hedge fund action regarding Urban Outfitters, Inc. (NASDAQ:URBN).

What have hedge funds been doing with Urban Outfitters, Inc. (NASDAQ:URBN)?

At the end of the second quarter, a total of 21 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of -16% from the previous quarter. By comparison, 27 hedge funds held shares or bullish call options in URBN a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Lee Ainslie MAVERICK CAPITAL

The largest stake in Urban Outfitters, Inc. (NASDAQ:URBN) was held by AQR Capital Management, which reported holding $95.7 million worth of stock at the end of March. It was followed by Bridgewater Associates with a $25.5 million position. Other investors bullish on the company included Citadel Investment Group, Millennium Management, and Gotham Asset Management.

Due to the fact that Urban Outfitters, Inc. (NASDAQ:URBN) has witnessed falling interest from hedge fund managers, we can see that there is a sect of hedge funds that elected to cut their entire stakes last quarter. At the top of the heap, Renaissance Technologies said goodbye to the biggest position of the 750 funds monitored by Insider Monkey, totaling an estimated $71.4 million in stock, and Robert Bishop’s Impala Asset Management was right behind this move, as the fund cut about $6.5 million worth. These bearish behaviors are important to note, as total hedge fund interest dropped by 4 funds last quarter.

Let’s now take a look at hedge fund activity in other stocks – not necessarily in the same industry as Urban Outfitters, Inc. (NASDAQ:URBN) but similarly valued. These stocks are Arco Platform Limited (NASDAQ:ARCE), Adient plc (NYSE:ADNT), LCI Industries (NYSE:LCII), and WSFS Financial Corporation (NASDAQ:WSFS). This group of stocks’ market values are similar to URBN’s market value.

Ticker No of HFs with positions Total Value of HF Positions (x1000) Change in HF Position
ARCE 9 49379 -2
ADNT 18 570678 -5
LCII 10 77218 2
WSFS 15 164450 -5
Average 13 215431 -2.5

View table here if you experience formatting issues.

As you can see these stocks had an average of 13 hedge funds with bullish positions and the average amount invested in these stocks was $215 million. That figure was $207 million in URBN’s case. Adient plc (NYSE:ADNT) is the most popular stock in this table. On the other hand Arco Platform Limited (NASDAQ:ARCE) is the least popular one with only 9 bullish hedge fund positions. Compared to these stocks Urban Outfitters, Inc. (NASDAQ:URBN) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 24.4% in 2019 through September 30th and outperformed the S&P 500 ETF (SPY) by 4 percentage points. Hedge funds were also right about betting on URBN as the stock returned 23.5% during Q3 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.

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

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