Is Urban Outfitters, Inc. (URBN) A Good Stock To Buy?

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 867 13F filings submitted by hedge funds and prominent investors. These filings show these funds’ portfolio positions as of September 30th, 2021. In this article we are going to take a look at smart money sentiment towards Urban Outfitters, Inc. (NASDAQ:URBN).

Is URBN a good stock to buy now? The smart money was reducing their bets on the stock. The number of bullish hedge fund positions shrunk by 5 recently. Urban Outfitters, Inc. (NASDAQ:URBN) was in 23 hedge funds’ portfolios at the end of September. The all time high for this statistic is 34. Our calculations also showed that URBN isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings).

Robert Pohly of Samlyn Capital

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium prices have more than doubled over the past year, so we go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. Keeping this in mind we’re going to take a peek at the fresh hedge fund action regarding Urban Outfitters, Inc. (NASDAQ:URBN).

Do Hedge Funds Think URBN Is A Good Stock To Buy Now?

At the end of September, a total of 23 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from the previous quarter. By comparison, 22 hedge funds held shares or bullish call options in URBN a year ago. With hedgies’ sentiment swirling, there exists a few noteworthy hedge fund managers who were increasing their stakes substantially (or already accumulated large positions).

When looking at the institutional investors followed by Insider Monkey, Robert Pohly’s Samlyn Capital has the biggest position in Urban Outfitters, Inc. (NASDAQ:URBN), worth close to $82.1 million, accounting for 1.1% of its total 13F portfolio. Sitting at the No. 2 spot is Arrowstreet Capital, led by Peter Rathjens, Bruce Clarke and John Campbell, holding a $62.1 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions contain Paul Marshall and Ian Wace’s Marshall Wace LLP, Israel Englander’s Millennium Management and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position MIK Capital allocated the biggest weight to Urban Outfitters, Inc. (NASDAQ:URBN), around 3.55% of its 13F portfolio. Samlyn Capital is also relatively very bullish on the stock, dishing out 1.1 percent of its 13F equity portfolio to URBN.

Due to the fact that Urban Outfitters, Inc. (NASDAQ:URBN) has witnessed bearish sentiment from the smart money, it’s safe to say that there is a sect of hedge funds that slashed their positions entirely in the third quarter. Intriguingly, Steven Boyd’s Armistice Capital said goodbye to the largest position of the 750 funds followed by Insider Monkey, worth an estimated $23.2 million in stock. Jack Woodruff’s fund, Candlestick Capital Management, also cut its stock, about $10.6 million worth. These bearish behaviors are important to note, as total hedge fund interest fell by 5 funds in the third quarter.

Let’s check out hedge fund activity in other stocks similar to Urban Outfitters, Inc. (NASDAQ:URBN). These stocks are John Wiley & Sons Inc (NYSE:JW), J&J Snack Foods Corp. (NASDAQ:JJSF), First Advantage Corporation (NASDAQ:FA), Vishay Intertechnology (NYSE:VSH), Atea Pharmaceuticals, Inc. (NASDAQ:AVIR), FormFactor, Inc. (NASDAQ:FORM), and First Majestic Silver Corp (NYSE:AG). This group of stocks’ market values match URBN’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 18.4 hedge funds with bullish positions and the average amount invested in these stocks was $516 million. That figure was $276 million in URBN’s case. Vishay Intertechnology (NYSE:VSH) is the most popular stock in this table. On the other hand First Majestic Silver Corp (NYSE:AG) is the least popular one with only 9 bullish hedge fund positions. Urban Outfitters, Inc. (NASDAQ:URBN) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for URBN is 57.1. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 31.1% in 2021 through December 9th and beat the market again by 5.1 percentage points. Unfortunately URBN wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on URBN were disappointed as the stock returned 5.8% since the end of September (through 12/9) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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

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