Is Urban Outfitters, Inc. (NASDAQ:URBN) Going to Burn These Hedge Funds?

Urban Outfitters, Inc. (NASDAQ:URBN) was in 25 hedge funds’ portfolio at the end of December. URBN investors should pay attention to an increase in enthusiasm from smart money in recent months. There were 15 hedge funds in our database with URBN positions at the end of the previous quarter.

In the financial world, there are many indicators market participants can use to track the equity markets. Some of the most underrated are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the elite money managers can beat their index-focused peers by a solid margin (see just how much).

Just as integral, bullish insider trading activity is another way to break down the investments you’re interested in. Obviously, there are many incentives for an upper level exec to drop shares of his or her company, but only one, very clear reason why they would behave bullishly. Plenty of empirical studies have demonstrated the impressive potential of this strategy if “monkeys” know what to do (learn more here).

Keeping this in mind, it’s important to take a glance at the key action surrounding Urban Outfitters, Inc. (NASDAQ:URBN).

What does the smart money think about Urban Outfitters, Inc. (NASDAQ:URBN)?

At the end of the fourth quarter, a total of 25 of the hedge funds we track held long positions in this stock, a change of 67% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists an “upper tier” of key hedge fund managers who were increasing their stakes considerably.

Of the funds we track, SAC Capital Advisors, managed by Steven Cohen, holds the largest position in Urban Outfitters, Inc. (NASDAQ:URBN). SAC Capital Advisors has a $119 million position in the stock, comprising 0.6% of its 13F portfolio. Coming in second is Phill Gross and Robert Atchinson of Adage Capital Management, with a $115 million position; the fund has 0.4% of its 13F portfolio invested in the stock. Remaining hedge funds that are bullish include Donald Chiboucis’s Columbus Circle Investors, Ken Griffin’s Citadel Investment Group and SAC Subsidiary’s Sigma Capital Management.

Now, some big names have been driving this bullishness. Sigma Capital Management, managed by SAC Subsidiary, initiated the largest position in Urban Outfitters, Inc. (NASDAQ:URBN). Sigma Capital Management had 33 million invested in the company at the end of the quarter. David Keidan’s Buckingham Capital Management also initiated a $20 million position during the quarter. The other funds with new positions in the stock are Alexander Mitchell’s Scopus Asset Management, Jacob Gottlieb’s Visium Asset Management, and Cliff Asness’s AQR Capital Management.

How are insiders trading Urban Outfitters, Inc. (NASDAQ:URBN)?

Insider trading activity, especially when it’s bullish, is most useful when the company in question has experienced transactions within the past half-year. Over the last six-month time frame, Urban Outfitters, Inc. (NASDAQ:URBN) has seen zero unique insiders purchasing, and 2 insider sales (see the details of insider trades here).

With the returns exhibited by the aforementioned time-tested strategies, retail investors should always monitor hedge fund and insider trading activity, and Urban Outfitters, Inc. (NASDAQ:URBN) is an important part of this process.

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