Before putting in our own effort and resources into finding a good investment, we can quickly utilize hedge fund expertise to give us a quick glimpse of whether that stock could make for a good addition to our portfolios. The odds are not exactly stacked in investors’ favor when it comes to beating the market, as evidenced by the fact that less than 49% of the stocks in the S&P 500 did so during the third quarter. The stats were even worse in recent years when most of the advances in the market were due to large gains by FAANG stocks. However, one bright side for individual investors was the strong performance of hedge funds’ top consensus picks. This year hedge funds’ top 20 stock picks outperformed the S&P 500 Index by 9.9 percentage points through the end of November. Thus, we can see that the tireless research and efforts of hedge funds to identify winning stocks can work to our advantage when we know how to use the data. While not all of their picks will be winners, our odds are much better following their best stock picks than trying to go it alone.
Is Uniqure NV (NASDAQ:QURE) an exceptional investment right now? Money managers are becoming more confident. The number of bullish hedge fund bets increased by 4 lately. Our calculations also showed that QURE isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
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’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Kris Jenner of Rock Springs Capital Management
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. We’re going to review the new hedge fund action surrounding Uniqure NV (NASDAQ:QURE).
What have hedge funds been doing with Uniqure NV (NASDAQ:QURE)?
At the end of the third quarter, a total of 38 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 12% from one quarter earlier. On the other hand, there were a total of 19 hedge funds with a bullish position in QURE a year ago. With the smart money’s sentiment swirling, there exists an “upper tier” of noteworthy hedge fund managers who were increasing their stakes meaningfully (or already accumulated large positions).
The largest stake in Uniqure NV (NASDAQ:QURE) was held by Redmile Group, which reported holding $94.9 million worth of stock at the end of September. It was followed by Nantahala Capital Management with a $77.5 million position. Other investors bullish on the company included Consonance Capital Management, Partner Fund Management, and Cormorant Asset Management. In terms of the portfolio weights assigned to each position Aquilo Capital Management allocated the biggest weight to Uniqure NV (NASDAQ:QURE), around 10.84% of its portfolio. Prosight Capital is also relatively very bullish on the stock, dishing out 7.18 percent of its 13F equity portfolio to QURE.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Aquilo Capital Management, managed by Marc Schneidman, assembled the biggest call position in Uniqure NV (NASDAQ:QURE). Aquilo Capital Management had $15.7 million invested in the company at the end of the quarter. Behzad Aghazadeh’s venBio Select Advisor also made a $14.4 million investment in the stock during the quarter. The following funds were also among the new QURE investors: Brandon Haley’s Holocene Advisors, Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management, and Louis Bacon’s Moore Global Investments.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Uniqure NV (NASDAQ:QURE) but similarly valued. We will take a look at Yunji Inc. (NASDAQ:YJ), American Finance Trust, Inc. (NASDAQ:AFIN), Plantronics, Inc. (NYSE:PLT), and Heron Therapeutics Inc (NASDAQ:HRTX). This group of stocks’ market values are similar to QURE’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| YJ | 3 | 5331 | -1 |
| AFIN | 8 | 11654 | 4 |
| PLT | 11 | 97331 | -7 |
| HRTX | 15 | 372665 | -3 |
| Average | 9.25 | 121745 | -1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.25 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $538 million in QURE’s case. Heron Therapeutics Inc (NASDAQ:HRTX) is the most popular stock in this table. On the other hand Yunji Inc. (NASDAQ:YJ) is the least popular one with only 3 bullish hedge fund positions. Compared to these stocks Uniqure NV (NASDAQ:QURE) is more popular among hedge funds. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Hedge funds were also right about betting on QURE as the stock returned 41.4% during the first two months of Q4 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.
