As we already know from media reports and hedge fund investor letters, many hedge funds lost money in fourth quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with technology among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) in this article.
Is Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) a healthy stock for your portfolio? Prominent investors are turning bullish. The number of long hedge fund positions improved by 2 in recent months. Our calculations also showed that AUPH isn’t among the 30 most popular stocks among hedge funds.
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 market by 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s analyze the key hedge fund action regarding Aurinia Pharmaceuticals Inc (NASDAQ:AUPH).
Hedge fund activity in Aurinia Pharmaceuticals Inc (NASDAQ:AUPH)
At the end of the fourth quarter, a total of 8 of the hedge funds tracked by Insider Monkey were long this stock, a change of 33% from the previous quarter. The graph below displays the number of hedge funds with bullish position in AUPH over the last 14 quarters. With hedgies’ capital changing hands, there exists a few notable hedge fund managers who were increasing their stakes considerably (or already accumulated large positions).
The largest stake in Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) was held by Polar Capital, which reported holding $22.6 million worth of stock at the end of December. It was followed by Vivo Capital with a $8.3 million position. Other investors bullish on the company included D E Shaw, Hudson Bay Capital Management, and Citadel Investment Group.
With a general bullishness amongst the heavyweights, key hedge funds have jumped into Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) headfirst. Vivo Capital, managed by Albert Cha and Frank Kung, initiated the biggest position in Aurinia Pharmaceuticals Inc (NASDAQ:AUPH). Vivo Capital had $8.3 million invested in the company at the end of the quarter. Mitchell Blutt’s Consonance Capital Management also made a $0.1 million investment in the stock during the quarter.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) but similarly valued. We will take a look at ViewRay, Inc. (NASDAQ:VRAY), Forestar Group Inc. (NYSE:FOR), Echo Global Logistics, Inc. (NASDAQ:ECHO), and Customers Bancorp Inc (NYSE:CUBI). This group of stocks’ market valuations resemble AUPH’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRAY | 21 | 177852 | -2 |
| FOR | 6 | 57047 | 1 |
| ECHO | 15 | 24246 | 1 |
| CUBI | 15 | 32362 | 6 |
| Average | 14.25 | 72877 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.25 hedge funds with bullish positions and the average amount invested in these stocks was $73 million. That figure was $36 million in AUPH’s case. ViewRay, Inc. (NASDAQ:VRAY) is the most popular stock in this table. On the other hand Forestar Group Inc. (NYSE:FOR) is the least popular one with only 6 bullish hedge fund positions. Aurinia Pharmaceuticals Inc (NASDAQ:AUPH) 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 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately AUPH wasn’t nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); AUPH investors were disappointed as the stock returned -7.6% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.
Disclosure: None. This article was originally published at Insider Monkey.
