Last year we predicted the arrival of the first US recession since 2009 and we told in advance that the market will decline by at least 20% in (Recession is Imminent: We Need A Travel Ban NOW). In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. In this article, we will take a closer look at hedge fund sentiment towards Aurinia Pharmaceuticals Inc (NASDAQ:AUPH).
Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) has experienced an increase in hedge fund sentiment recently. Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) was in 27 hedge funds’ portfolios at the end of March. The all time high for this statistic is 32. There were 24 hedge funds in our database with AUPH positions at the end of the fourth quarter. Our calculations also showed that AUPH isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings).
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that a select group of hedge fund holdings outperformed the S&P 500 ETFs by 115 percentage points since March 2017 (see the details here). That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Mark Kingdon of Kingdon Capital
At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, economists warn of inflation flare up. So, we are checking out this backdoor gold play that has hit peak gains of 718% in a little over a year. We go through lists like the 10 best battery stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind let’s take a gander at the key hedge fund action regarding Aurinia Pharmaceuticals Inc (NASDAQ:AUPH).
Do Hedge Funds Think AUPH Is A Good Stock To Buy Now?
Heading into the second quarter of 2021, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 13% from the fourth quarter of 2020. On the other hand, there were a total of 28 hedge funds with a bullish position in AUPH a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) was held by OrbiMed Advisors, which reported holding $78.8 million worth of stock at the end of December. It was followed by Kingdon Capital with a $22.7 million position. Other investors bullish on the company included Citadel Investment Group, Baker Bros. Advisors, and Healthcor Management LP. In terms of the portfolio weights assigned to each position Blackcrane Capital allocated the biggest weight to Aurinia Pharmaceuticals Inc (NASDAQ:AUPH), around 10.3% of its 13F portfolio. Prosight Capital is also relatively very bullish on the stock, earmarking 3.84 percent of its 13F equity portfolio to AUPH.
With a general bullishness amongst the heavyweights, key money managers have jumped into Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) headfirst. DG Capital Management, managed by Dov Gertzulin, initiated the largest position in Aurinia Pharmaceuticals Inc (NASDAQ:AUPH). DG Capital Management had $7.7 million invested in the company at the end of the quarter. Daniel Kim’s Blackcrane Capital also made a $6.5 million investment in the stock during the quarter. The following funds were also among the new AUPH investors: Himanshu Gulati’s Antara Capital, Israel Englander’s Millennium Management, and Joe Riccardo’s Healthcare Value Capital.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) but similarly valued. These stocks are Addus Homecare Corporation (NASDAQ:ADUS), Malibu Boats Inc (NASDAQ:MBUU), Cytokinetics, Inc. (NASDAQ:CYTK), Steelcase Inc. (NYSE:SCS), Northwest Natural Holding Company (NYSE:NWN), ICF International Inc (NASDAQ:ICFI), and Aluminum Corp. of China Limited (NYSE:ACH). All of these stocks’ market caps match AUPH’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ADUS | 17 | 62230 | -1 |
| MBUU | 16 | 150234 | 0 |
| CYTK | 29 | 585164 | 3 |
| SCS | 19 | 127268 | 2 |
| NWN | 10 | 28380 | 0 |
| ICFI | 12 | 28041 | -1 |
| ACH | 3 | 7519 | -1 |
| Average | 15.1 | 141262 | 0.3 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.1 hedge funds with bullish positions and the average amount invested in these stocks was $141 million. That figure was $225 million in AUPH’s case. Cytokinetics, Inc. (NASDAQ:CYTK) is the most popular stock in this table. On the other hand Aluminum Corp. of China Limited (NYSE:ACH) is the least popular one with only 3 bullish hedge fund positions. Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for AUPH is 79.5. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through July 9th and beat the market again by 6.7 percentage points. Unfortunately AUPH wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on AUPH were disappointed as the stock returned -3.1% since the end of March (through 7/9) 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 many of these stocks already outperformed the market since 2019.
Follow Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH)
Follow Aurinia Pharmaceuticals Inc. (NASDAQ:AUPH)
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Disclosure: None. This article was originally published at Insider Monkey.
