The most crowded pharma longs and shorts, according to UBS

The UBS pharma equity team is out with a quant list of most crowded stocks on the long and short side.

Crowding is a sentiment metric that basically measures popularity in positioning (long or short). It indicates if a stock has a significantly above-average number of buyers (crowded longs) or sellers (crowded shorts).

Crowded longs are susceptible to bigger than usual declines on bad news while crowded shorts are susceptible to squeezes on the short side on good news.

UBS measures crowding based on “prime brokerage data, stock loan data, 13F filings, and proprietary UBS data to provide a good overall lens for positioning information.”

It assigns a concentration score range from -30, which are the most crowded shorts, to 30, the most crowded longs.

The most crowded longs in the U.S. pharmaceutical sector:

• United Therapeutics Corp. (NASDAQ:UTHR) – Benefits from biotechnology. Crowding score 23.7
• Neurocrine Biosciences Inc. (NBIX) – Also benefits from the macro environment. The stock could outperform, but there is some investor anxiety about potential business development into the year-end. Crowding score 23.6
• Alkermes Plc. (ALKS) – The stock has been crowding since April. Crowding score 20.3

The most crowded shorts in the U.S. pharmaceuticals:

• Coherus BioSciences Inc. (CHRS) – There is some concern about cash burn and the company “bridging the next few quarters,” according to the report. Crowding score -8
• Karuna Therapeutics Inc. (KRTX) – UBS analysts see limited catalysts for the company and recent stock strength could reverse. Crowding score -5.3
• Cytokinetics Inc. (CYTK) – “Investors are hesitant to take binary long/short risk at YE.” Crowding score -4.5