Do Hedge Funds Love Signet Jewelers Limited (SIG)?

In this article we will check out the progression of hedge fund sentiment towards Signet Jewelers Limited (NYSE:SIG) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Hedge fund interest in Signet Jewelers Limited (NYSE:SIG) shares was flat at the end of last quarter. This is usually a negative indicator. Our calculations also showed that SIG isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings). 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 Ballard Power Systems Inc. (NASDAQ:BLDP), Mimecast Limited (NASDAQ:MIME), and Open Lending Corporation (NASDAQ:LPRO) to gather more data points.

Sander Gerber of Hudson Bay 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 gander at the key hedge fund action encompassing Signet Jewelers Limited (NYSE:SIG).

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

At third quarter’s end, a total of 33 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 0% from the second quarter of 2021. On the other hand, there were a total of 22 hedge funds with a bullish position in SIG a year ago. So, let’s see which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to Insider Monkey’s hedge fund database, Robert Joseph Caruso’s Select Equity Group has the biggest position in Signet Jewelers Limited (NYSE:SIG), worth close to $413 million, corresponding to 1.4% of its total 13F portfolio. Coming in second is D E Shaw, managed by D. E. Shaw, which holds a $151.6 million position; the fund has 0.1% of its 13F portfolio invested in the stock. Other professional money managers with similar optimism include Stephen Mildenhall’s Contrarius Investment Management, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Gabriel Plotkin’s Melvin Capital Management. In terms of the portfolio weights assigned to each position Contrarius Investment Management allocated the biggest weight to Signet Jewelers Limited (NYSE:SIG), around 6.88% of its 13F portfolio. Capital Growth Management is also relatively very bullish on the stock, designating 3.86 percent of its 13F equity portfolio to SIG.

Judging by the fact that Signet Jewelers Limited (NYSE:SIG) has experienced a decline in interest from hedge fund managers, it’s safe to say that there exists a select few hedgies who were dropping their positions entirely by the end of the third quarter. It’s worth mentioning that Kerr Neilson’s Platinum Asset Management said goodbye to the largest position of the 750 funds monitored by Insider Monkey, valued at about $7.5 million in stock, and Ryan Tolkin (CIO)’s Schonfeld Strategic Advisors was right behind this move, as the fund dropped about $1.3 million worth. These moves are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Let’s go over hedge fund activity in other stocks similar to Signet Jewelers Limited (NYSE:SIG). We will take a look at Ballard Power Systems Inc. (NASDAQ:BLDP), Mimecast Limited (NASDAQ:MIME), Open Lending Corporation (NASDAQ:LPRO), AppFolio Inc (NASDAQ:APPF), Amyris Inc (NASDAQ:AMRS), Cushman & Wakefield plc (NYSE:CWK), and Qurate Retail, Inc. (NASDAQ:QRTEA). This group of stocks’ market valuations are similar to SIG’s market valuation.

View table here if you experience formatting issues.

As you can see these stocks had an average of 23 hedge funds with bullish positions and the average amount invested in these stocks was $350 million. That figure was $1165 million in SIG’s case. Qurate Retail, Inc. (NASDAQ:QRTEA) is the most popular stock in this table. On the other hand Ballard Power Systems Inc. (NASDAQ:BLDP) is the least popular one with only 15 bullish hedge fund positions. Signet Jewelers Limited (NYSE:SIG) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for SIG is 70.4. 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. 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 28.6% in 2021 through November 30th and still beat the market by 5.6 percentage points. Hedge funds were also right about betting on SIG as the stock returned 23.3% since the end of Q3 (through 11/30) and outperformed the market. Hedge funds were rewarded for their relative bullishness.

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

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