The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. Insider Monkey finished processing 821 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of March 31st, 2020. In this article we are going to take a look at smart money sentiment towards Urban One, Inc. (NASDAQ:UONEK).
Urban One, Inc. (NASDAQ:UONEK) was in 3 hedge funds’ portfolios at the end of March. UONEK has seen a decrease in activity from the world’s largest hedge funds recently. There were 4 hedge funds in our database with UONEK holdings at the end of the previous quarter. Our calculations also showed that UONEK 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.
So, why do we pay attention to hedge fund sentiment before making any investment decisions? Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 44 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter. Even if you aren’t comfortable with shorting stocks, you should at least avoid initiating long positions in stocks that are in our short portfolio.
Israel Englander of Millennium Management
At Insider Monkey we leave no stone unturned when looking for the next great investment idea. For example, legendary investor Bill Miller told investors to sell 7 extremely popular recession stocks last month. So, we went through his list and recommended another stock with 100% upside potential instead. 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 S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. With all of this in mind we’re going to analyze the fresh hedge fund action surrounding Urban One, Inc. (NASDAQ:UONEK).
Hedge fund activity in Urban One, Inc. (NASDAQ:UONEK)
At Q1’s end, a total of 3 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -25% from one quarter earlier. On the other hand, there were a total of 5 hedge funds with a bullish position in UONEK a year ago. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
More specifically, Brigade Capital was the largest shareholder of Urban One, Inc. (NASDAQ:UONEK), with a stake worth $3.7 million reported as of the end of September. Trailing Brigade Capital was Renaissance Technologies, which amassed a stake valued at $1.4 million. Millennium Management was 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 Brigade Capital allocated the biggest weight to Urban One, Inc. (NASDAQ:UONEK), around 0.17% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, dishing out 0.0014 percent of its 13F equity portfolio to UONEK.
We view hedge fund activity in the stock unfavorable, but in this case there was only a single hedge fund selling its entire position: Citadel Investment Group. One hedge fund selling its entire position doesn’t always imply a bearish intent. Theoretically a hedge fund may decide to sell a promising position in order to invest the proceeds in a more promising idea. However, we don’t think this is the case in this case because none of the 750+ hedge funds tracked by Insider Monkey identified UONEK as a viable investment and initiated a position in the stock.
Let’s check out hedge fund activity in other stocks similar to Urban One, Inc. (NASDAQ:UONEK). These stocks are Western Copper and Gold Corporation (NYSE:WRN), Aclaris Therapeutics, Inc. (NASDAQ:ACRS), Atlantic American Corporation (NASDAQ:AAME), and Espey Manufacturing & Electronics Corp. (NYSE:ESP). This group of stocks’ market valuations match UONEK’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| WRN | 2 | 97 | -1 |
| ACRS | 15 | 22516 | -2 |
| AAME | 1 | 114 | 0 |
| ESP | 1 | 2460 | 0 |
| Average | 4.75 | 6297 | -0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 4.75 hedge funds with bullish positions and the average amount invested in these stocks was $6 million. That figure was $5 million in UONEK’s case. Aclaris Therapeutics, Inc. (NASDAQ:ACRS) is the most popular stock in this table. On the other hand Atlantic American Corporation (NASDAQ:AAME) is the least popular one with only 1 bullish hedge fund positions. Urban One, Inc. (NASDAQ:UONEK) 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 7.9% in 2020 through May 22nd and surpassed the market by 15.6 percentage points. Unfortunately UONEK wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); UONEK investors were disappointed as the stock returned -29.5% 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.
