Before we spend countless hours researching a company, we like to analyze what insiders, hedge funds and billionaire investors think of the stock first. This is a necessary first step in our investment process because our research has shown that the elite investors’ consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of Kura Oncology, Inc. (NASDAQ:KURA).
Is KURA stock a buy or sell? Prominent investors were becoming hopeful. The number of long hedge fund positions went up by 9 lately. Kura Oncology, Inc. (NASDAQ:KURA) was in 43 hedge funds’ portfolios at the end of the fourth quarter of 2020. The all time high for this statistic was previously 34. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. Our calculations also showed that KURA isn’t among the 30 most popular stocks among hedge funds (click for Q4 rankings).
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 124 percentage points since March 2017 (see the details here).
Oleg Nodelman of EcoR1 Capital
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, the House passed a landmark bill decriminalizing marijuana. So, we are checking out this under the radar cannabis stock right now. We go through lists like the 10 best battery stocks to buy to identify the next stock with 10x upside potential. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our website. Now we’re going to review the fresh hedge fund action encompassing Kura Oncology, Inc. (NASDAQ:KURA).
Do Hedge Funds Think KURA Is A Good Stock To Buy Now?
At the end of the fourth quarter, a total of 43 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 26% from the previous quarter. The graph below displays the number of hedge funds with bullish position in KURA over the last 22 quarters. With hedge funds’ sentiment swirling, there exists a select group of notable hedge fund managers who were boosting their holdings significantly (or already accumulated large positions).
More specifically, Avoro Capital Advisors (venBio Select Advisor) was the largest shareholder of Kura Oncology, Inc. (NASDAQ:KURA), with a stake worth $130.6 million reported as of the end of December. Trailing Avoro Capital Advisors (venBio Select Advisor) was Citadel Investment Group, which amassed a stake valued at $100.2 million. EcoR1 Capital, Holocene Advisors, and Biotechnology Value Fund / BVF Inc were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Acuta Capital Partners allocated the biggest weight to Kura Oncology, Inc. (NASDAQ:KURA), around 5.67% of its 13F portfolio. EcoR1 Capital is also relatively very bullish on the stock, earmarking 3.11 percent of its 13F equity portfolio to KURA.
As one would reasonably expect, specific money managers have been driving this bullishness. Hillhouse Capital Management, managed by Lei Zhang, assembled the most outsized position in Kura Oncology, Inc. (NASDAQ:KURA). Hillhouse Capital Management had $21.2 million invested in the company at the end of the quarter. Kris Jenner, Gordon Bussard, Graham McPhail’s Rock Springs Capital Management also made a $16.6 million investment in the stock during the quarter. The following funds were also among the new KURA investors: Richard Driehaus’s Driehaus Capital, Israel Englander’s Millennium Management, and Ting Jia’s Octagon Capital Advisors.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Kura Oncology, Inc. (NASDAQ:KURA) but similarly valued. We will take a look at Shenandoah Telecommunications Company (NASDAQ:SHEN), TC Pipelines, LP (NYSE:TCP), Pretium Resources Inc (NYSE:PVG), Flagstar Bancorp Inc (NYSE:FBC), Silk Road Medical, Inc. (NASDAQ:SILK), Main Street Capital Corporation (NYSE:MAIN), and Gentherm Inc (NASDAQ:THRM). This group of stocks’ market values are closest to KURA’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SHEN | 5 | 74165 | -4 |
| TCP | 2 | 984 | -1 |
| PVG | 22 | 162262 | 2 |
| FBC | 28 | 280734 | 3 |
| SILK | 27 | 183660 | 7 |
| MAIN | 7 | 42787 | 3 |
| THRM | 13 | 111371 | 3 |
| Average | 14.9 | 122280 | 1.9 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 14.9 hedge funds with bullish positions and the average amount invested in these stocks was $122 million. That figure was $619 million in KURA’s case. Flagstar Bancorp Inc (NYSE:FBC) is the most popular stock in this table. On the other hand TC Pipelines, LP (NYSE:TCP) is the least popular one with only 2 bullish hedge fund positions. Compared to these stocks Kura Oncology, Inc. (NASDAQ:KURA) is more popular among hedge funds. Our overall hedge fund sentiment score for KURA is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 30 most popular stocks among hedge funds returned 81.2% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 26 percentage points. These stocks gained 5.3% in 2021 through March 19th and still beat the market by 0.8 percentage points. Unfortunately KURA wasn’t nearly as popular as these 30 stocks and hedge funds that were betting on KURA were disappointed as the stock returned -17.5% since the end of the fourth quarter (through 3/19) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 30 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.
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Disclosure: None. This article was originally published at Insider Monkey.
