Our extensive research has shown that imitating the smart money can generate significant returns for retail investors, which is why we track nearly 750 active prominent money managers and analyze their quarterly 13F filings. The stocks that are heavily bought by hedge funds historically outperformed the market, though there is no shortage of high profile failures like hedge funds’ 2018 losses in Facebook and Apple. Let’s take a closer look at what the funds we track think about Urban One, Inc. (NASDAQ:UONEK) in this article.
Hedge fund interest in Urban One, Inc. (NASDAQ:UONEK) shares was flat at the end of last quarter. This is usually a negative indicator. The level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS), New Home Company Inc (NYSE:NWHM), and EMCORE Corporation (NASDAQ:EMKR) to gather more data points. Our calculations also showed that UONEK isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? 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 Russell 2000 ETFs by 40 percentage points since May 2014 (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 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Jim Simons of Renaissance Technologies
We leave no stone unturned when looking for the next great investment idea. For example Discover is offering this insane cashback card, so we look into shorting the stock. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We even check out this option genius’ weekly trade ideas. This December, we recommended Adams Energy as a one-way bet based on an under-the-radar fund manager’s investor letter and the stock already gained 20 percent. Keeping this in mind we’re going to take a look at the key hedge fund action encompassing Urban One, Inc. (NASDAQ:UONEK).
Hedge fund activity in Urban One, Inc. (NASDAQ:UONEK)
At the end of the third quarter, a total of 4 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2019. By comparison, 5 hedge funds held shares or bullish call options in UONEK a year ago. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Brigade Capital, managed by Don Morgan, holds the most valuable position in Urban One, Inc. (NASDAQ:UONEK). Brigade Capital has a $7.6 million position in the stock, comprising 0.4% of its 13F portfolio. Sitting at the No. 2 spot is Renaissance Technologies, holding a $2.8 million position; less than 0.1%% of its 13F portfolio is allocated to the company. Remaining members of the smart money with similar optimism consist of Israel Englander’s Millennium Management, Ken Griffin’s Citadel Investment Group and . In terms of the portfolio weights assigned to each position Brigade Capital allocated the biggest weight to Urban One, Inc. (NASDAQ:UONEK), around 0.41% of its 13F portfolio. Renaissance Technologies is also relatively very bullish on the stock, earmarking 0.0024 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: Mariner 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 only one of the 800+ hedge funds tracked by Insider Monkey identified as a viable investment and initiated a position in the stock (that fund was Citadel Investment Group).
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Urban One, Inc. (NASDAQ:UONEK) but similarly valued. These stocks are Corvus Pharmaceuticals, Inc. (NASDAQ:CRVS), New Home Company Inc (NYSE:NWHM), EMCORE Corporation (NASDAQ:EMKR), and Mediwound Ltd (NASDAQ:MDWD). This group of stocks’ market caps resemble UONEK’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CRVS | 6 | 36290 | -1 |
| NWHM | 8 | 16623 | 2 |
| EMKR | 13 | 33826 | 2 |
| MDWD | 1 | 918 | 0 |
| Average | 7 | 21914 | 0.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 7 hedge funds with bullish positions and the average amount invested in these stocks was $22 million. That figure was $11 million in UONEK’s case. EMCORE Corporation (NASDAQ:EMKR) is the most popular stock in this table. On the other hand Mediwound Ltd (NASDAQ:MDWD) 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 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately UONEK wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was quite bearish); UONEK investors were disappointed as the stock returned 3.6% during the first two months of the fourth 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 20 most popular stocks among hedge funds as 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.