We hate to say this but, we told you so. On February 27th we published an article with the title Recession is Imminent: We Need A Travel Ban NOW and predicted a US recession when the S&P 500 Index was trading at the 3150 level. We also told you to short the market and buy long-term Treasury bonds. Our article also called for a total international travel ban. While we were warning you, President Trump minimized the threat and failed to act promptly. As a result of his inaction, we will now experience a deeper recession (see why hell is coming).
In these volatile markets we scrutinize hedge fund filings to get a reading on which direction each stock might be going. With the first-quarter round of 13F filings behind us it is time to take a look at the stocks in which some of the best money managers in the world preferred to invest or sell heading into the first quarter. One of these stocks was Uniqure NV (NASDAQ:QURE).
Is Uniqure NV (NASDAQ:QURE) a bargain? Investors who are in the know are becoming hopeful. The number of bullish hedge fund bets improved by 4 recently. Our calculations also showed that QURE isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings and see the video at the end of this article for Q3 rankings). QURE was in 44 hedge funds’ portfolios at the end of the fourth quarter of 2019. There were 40 hedge funds in our database with QURE holdings at the end of the previous quarter.
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 was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 41 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 35.3% through March 3rd. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Samuel Isaly of OrbiMed Advisors
We leave no stone unturned when looking for the next great investment idea. For example we recently identified a stock that trades 25% below the net cash on its balance sheet. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences, and go through short-term trade recommendations like this one. We even check out the recommendations of services with hard to believe track records. Our best call in 2020 was shorting the market when S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind let’s review the recent hedge fund action surrounding Uniqure NV (NASDAQ:QURE).
What have hedge funds been doing with Uniqure NV (NASDAQ:QURE)?
At Q4’s end, a total of 44 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 10% from one quarter earlier. By comparison, 17 hedge funds held shares or bullish call options in QURE a year ago. With the smart money’s positions undergoing their usual ebb and flow, there exists a select group of key hedge fund managers who were boosting their stakes considerably (or already accumulated large positions).
When looking at the institutional investors followed by Insider Monkey, Jeremy Green’s Redmile Group has the most valuable position in Uniqure NV (NASDAQ:QURE), worth close to $183 million, amounting to 4.4% of its total 13F portfolio. Coming in second is Behzad Aghazadeh of venBio Select Advisor, with a $121.8 million position; the fund has 3.6% of its 13F portfolio invested in the stock. Some other hedge funds and institutional investors with similar optimism include Wilmot B. Harkey and Daniel Mack’s Nantahala Capital Management, and Samuel Isaly’s OrbiMed Advisors. In terms of the portfolio weights assigned to each position Aquilo Capital Management allocated the biggest weight to Uniqure NV (NASDAQ:QURE), around 10.68% of its 13F portfolio. Corriente Advisors is also relatively very bullish on the stock, dishing out 9.72 percent of its 13F equity portfolio to QURE.
As one would reasonably expect, specific money managers have jumped into Uniqure NV (NASDAQ:QURE) headfirst. Senator Investment Group, managed by Doug Silverman and Alexander Klabin, assembled the most outsized position in Uniqure NV (NASDAQ:QURE). Senator Investment Group had $23.3 million invested in the company at the end of the quarter. Mark Hart III’s Corriente Advisors also made a $18.1 million investment in the stock during the quarter. The other funds with brand new QURE positions are Travis Cocke’s Voss Capital, David Greenspan’s Slate Path Capital, and Arsani William’s Logos Capital.
Let’s go over hedge fund activity in other stocks similar to Uniqure NV (NASDAQ:QURE). These stocks are BJ’s Wholesale Club Holdings, Inc. (NYSE:BJ), United States Cellular Corporation (NYSE:USM), FS KKR Capital Corp. (NYSE:FSK), and CenterState Bank Corporation (NASDAQ:CSFL). 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 |
|---|---|---|---|
| BJ | 22 | 191163 | -4 |
| USM | 21 | 132835 | 3 |
| FSK | 28 | 234006 | 2 |
| CSFL | 16 | 77742 | 3 |
| Average | 21.75 | 158937 | 1 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.75 hedge funds with bullish positions and the average amount invested in these stocks was $159 million. That figure was $1052 million in QURE’s case. FS KKR Capital Corp. (NYSE:FSK) is the most popular stock in this table. On the other hand CenterState Bank Corporation (NASDAQ:CSFL) is the least popular one with only 16 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 41.3% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks lost 17.4% in 2020 through March 25th and still beat the market by 5.5 percentage points. Unfortunately QURE wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on QURE were disappointed as the stock returned -37.5% during the first two and a half months of 2020 (through March 25th) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as most of these stocks already outperformed the market in Q1.
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Disclosure: None. This article was originally published at Insider Monkey.
