At the end of February we announced the arrival of the first US recession since 2009 and we predicted 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 Kura Oncology, Inc. (NASDAQ:KURA).
Kura Oncology, Inc. (NASDAQ:KURA) shareholders have witnessed an increase in activity from the world’s largest hedge funds recently. Our calculations also showed that KURA 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.
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 58 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 36% through May 18th. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Oleg Nodelman of EcoR1 Capital
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 trades like this one. 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 view the key hedge fund action encompassing Kura Oncology, Inc. (NASDAQ:KURA).
How have hedgies been trading Kura Oncology, Inc. (NASDAQ:KURA)?
At Q1’s end, a total of 23 of the hedge funds tracked by Insider Monkey were long this stock, a change of 5% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards KURA over the last 18 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
The largest stake in Kura Oncology, Inc. (NASDAQ:KURA) was held by EcoR1 Capital, which reported holding $34.9 million worth of stock at the end of September. It was followed by Biotechnology Value Fund / BVF Inc with a $24.2 million position. Other investors bullish on the company included Prosight Capital, Cormorant Asset Management, and Ikarian Capital. In terms of the portfolio weights assigned to each position Prosight Capital allocated the biggest weight to Kura Oncology, Inc. (NASDAQ:KURA), around 6.74% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, earmarking 3.65 percent of its 13F equity portfolio to KURA.
Consequently, some big names were breaking ground themselves. Ikarian Capital, managed by Neil Shahrestani, established the most outsized position in Kura Oncology, Inc. (NASDAQ:KURA). Ikarian Capital had $7.6 million invested in the company at the end of the quarter. Manfred Yu’s Acuta Capital Partners also initiated a $2 million position during the quarter. The other funds with brand new KURA positions are Renaissance Technologies and Mike Vranos’s Ellington.
Let’s check out hedge fund activity in other stocks similar to Kura Oncology, Inc. (NASDAQ:KURA). These stocks are Brinker International, Inc. (NYSE:EAT), Apollo Investment Corp. (NASDAQ:AINV), Golden Ocean Group Ltd (NASDAQ:GOGL), and Global Medical REIT Inc. (NYSE:GMRE). This group of stocks’ market values match KURA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| EAT | 16 | 47292 | -5 |
| AINV | 10 | 19432 | 1 |
| GOGL | 8 | 140504 | -1 |
| GMRE | 10 | 13400 | 1 |
| Average | 11 | 55157 | -1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 11 hedge funds with bullish positions and the average amount invested in these stocks was $55 million. That figure was $122 million in KURA’s case. Brinker International, Inc. (NYSE:EAT) is the most popular stock in this table. On the other hand Golden Ocean Group Ltd (NASDAQ:GOGL) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Kura Oncology, Inc. (NASDAQ:KURA) is more popular among hedge funds. 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 returned 13.9% in 2020 through June 10th but still managed to beat the market by 14.2 percentage points. Hedge funds were also right about betting on KURA as the stock returned 71% so far in Q2 (through June 10th) 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.
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Disclosure: None. This article was originally published at Insider Monkey.
