The shares of fashion retailer Express, Inc. (NYSE:EXPR) are trading 17.40% higher in trading today after strong second quarter financial results were released by the company this morning. The apparel company reported earnings per share of $0.25 against market expectations of $0.16. Its net sales topped the analysts’ estimates of $502.1 million with reported quarterly sales of $535.6 million. The shares of Express, Inc. (NYSE:EXPR) touched their 52-week high of $20.26, propelled by these quarterly results. On a year-over-year basis, the sales improved by 11% and the net income increased more than three-fold. The e-commerce sales of the specialty apparel company were up by 21% in the second quarter, to $75 million. The strong results allowed the company to upgrade its annual EPS guidance to a range of between $1.30 to $1.37 against previous guidance of $1.11 to $1.22 per share.
The shares of Express, Inc. (NYSE:EXPR) have enjoyed a successful run in 2015, with year-to-date growth of 30.53%. The apparel company gained popularity among the hedge funds in our database during the second quarter of this year. Out of 737 actively-reporting hedge funds that we track at Insider Monkey, 30 held equity positions worth $216.99 million in the company. The aggregate holdings were up by 17.21% in comparison with the previous quarter, while the number of hedge funds with stakes in the company rose by ten. The shares of Express, Inc. (NYSE:EXPR) were up by 9.56% during the second quarter, indicating additional purchases were made by hedge funds.
At Insider Monkey, we track hedge funds’ moves in order to identify actionable patterns and profit from them. Our research has shown that hedge funds’ large-cap stock picks historically delivered a monthly alpha of six basis points, though these stocks underperformed the S&P 500 Total Return Index by an average of seven basis points per month between 1999 and 2012. On the other hand, the 15 most popular small-cap stocks among hedge funds outperformed the S&P 500 Index by an average of 95 basis points per month (read the details here). Since the official launch of our small-cap strategy in August 2012, it has performed just as predicted, returning 118% and beating the market by more than 60 percentage points. We believe the data is clear: investors will be better off by focusing on small-cap stocks utilizing hedge fund expertise rather than large-cap stocks.
Keeping an eye over insider activity can help investors identify key management sentiment that can indicate growth within the company. In terms of insider activity, Express, Inc. (NYSE:EXPR) has remained inactive in 2015, save for one insider sale transaction. Jeanne St. Pierre, Executive Vice President of Stores at Express, Inc., sold 7,000 shares of the company on June 8.
What does the smart money think about Express, Inc. (NYSE:EXPR)?
The smart money held a positive outlook on the stock of Express, Inc. (NYSE:EXPR) during the second quarter. Scopia Capital, led by Matt Sirovich and Jeremy Mindich, was the largest shareholder of Express, Inc., initiating a new position of 4.22 million shares valued at $76.38 million. Joel Greenblatt of Gotham Asset Management also initiated an equity holding in the company housing 1.06 million shares with a market value of $19.15 million. Lee Munder Capital Group and Shellback Capital were other major shareholders, having 785,827 shares and 775,000 shares in their portfolio at the end of the second quarter, respectively.
Carlson Capital and Peak6 Capital Management sold off their entire stakes in the company during the second quarter. Some investment managers reduced their stakes in Express, Inc. (NYSE:EXPR) during the same period. Glenn Russell Dubin’s Highbridge Capital Management cut its stake in the company by 93%, holding 48,906 shares worth $886,000 on June 30. Stadium Capital Management trimmed its stake in the apparel company by 87%, reporting ownership of 353,365 shares. D E Shaw and Citadel Investment Group were among the other investment firms trimming their stakes in Express Inc during the second quarter.
Considering the positive hedge fund sentiment and strong second quarter results, we would recommend a small long position in Express, Inc. (NYSE:EXPR).
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