Hedge Funds Never Been Less Bullish On Urovant Sciences Ltd. (UROV)

We at Insider Monkey have gone over 821 13F filings that hedge funds and prominent investors are required to file by the SEC The 13F filings show the funds’ and investors’ portfolio positions as of March 31st, near the height of the coronavirus market crash. In this article, we look at what those funds think of Urovant Sciences Ltd. (NASDAQ:UROV) based on that data.

Urovant Sciences Ltd. (NASDAQ:UROV) was in 7 hedge funds’ portfolios at the end of March. UROV investors should be aware of a decrease in enthusiasm from smart money recently. There were 13 hedge funds in our database with UROV positions at the end of the previous quarter. Our calculations also showed that UROV 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.

Joseph Edelman of Perceptive Advisors

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 stocks recommended/scorned by legendary Bill Miller. 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. With all of this in mind let’s take a look at the latest hedge fund action regarding Urovant Sciences Ltd. (NASDAQ:UROV).

How are hedge funds trading Urovant Sciences Ltd. (NASDAQ:UROV)?

At the end of the first quarter, a total of 7 of the hedge funds tracked by Insider Monkey were long this stock, a change of -46% from the fourth quarter of 2019. Below, you can check out the change in hedge fund sentiment towards UROV over the last 18 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

Of the funds tracked by Insider Monkey, Joseph Edelman’s Perceptive Advisors has the number one position in Urovant Sciences Ltd. (NASDAQ:UROV), worth close to $21.8 million, accounting for 0.6% of its total 13F portfolio. On Perceptive Advisors’s heels is Baker Bros. Advisors, managed by Julian Baker and Felix Baker, which holds a $9.2 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Remaining peers that are bullish consist of Phill Gross and Robert Atchinson’s Adage Capital Management, Anand Parekh’s Alyeska Investment Group and Peter S. Park’s Park West Asset Management. In terms of the portfolio weights assigned to each position Samsara BioCapital allocated the biggest weight to Urovant Sciences Ltd. (NASDAQ:UROV), around 0.84% of its 13F portfolio. Perceptive Advisors is also relatively very bullish on the stock, designating 0.57 percent of its 13F equity portfolio to UROV.

Because Urovant Sciences Ltd. (NASDAQ:UROV) has witnessed a decline in interest from the smart money, we can see that there was a specific group of hedge funds that slashed their positions entirely last quarter. It’s worth mentioning that Michael Castor’s Sio Capital dropped the largest stake of the “upper crust” of funds followed by Insider Monkey, totaling close to $2.5 million in stock, and Oleg Nodelman’s EcoR1 Capital was right behind this move, as the fund said goodbye to about $0.4 million worth. These moves are interesting, as total hedge fund interest was cut by 6 funds last quarter.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Urovant Sciences Ltd. (NASDAQ:UROV) but similarly valued. We will take a look at Bridgewater Bancshares, Inc. (NASDAQ:BWB), Endurance International Group Holdings Inc (NASDAQ:EIGI), Verrica Pharmaceuticals Inc. (NASDAQ:VRCA), and Astronics Corporation (NASDAQ:ATRO). All of these stocks’ market caps match UROV’s market cap.

View table here if you experience formatting issues.

As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $48 million in UROV’s case. Astronics Corporation (NASDAQ:ATRO) is the most popular stock in this table. On the other hand Verrica Pharmaceuticals Inc. (NASDAQ:VRCA) is the least popular one with only 3 bullish hedge fund positions. Urovant Sciences Ltd. (NASDAQ:UROV) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. 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 gained 13.9% in 2020 through June 10th and surpassed the market by 14.2 percentage points. Unfortunately UROV wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); UROV investors were disappointed as the stock returned 18.1% during the second quarter and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.

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