Fossil Group Inc (FOSL): Are Hedge Funds Right About This Stock?

Hedge funds and other investment firms that we track manage billions of dollars of their wealthy clients’ money, and needless to say, they are painstakingly thorough when analyzing where to invest this money, as their own wealth depends on it. Regardless of the various methods used by elite investors like David Tepper and Dan Loeb, the resources they expend are second-to-none. This is especially valuable when it comes to small-cap stocks, which is where they generate their strongest outperformance, as their resources give them a huge edge when it comes to studying these stocks compared to the average investor, which is why we intently follow their activity in the small-cap space.

Is Fossil Group Inc (NASDAQ:FOSL) a buy, sell, or hold? Prominent investors are selling. The number of long hedge fund positions were cut by 4 lately. FOSL was in 29 hedge funds’ portfolios at the end of the third quarter of 2015. There were 33 hedge funds in our database with FOSL holdings at the end of the previous quarter. 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 Communications Sales & Leasing Inc (NASDAQ:CSAL), Central Fund of Canada Limited (USA) (NYSEAMEX:CEF), and Verint Systems Inc. (NASDAQ:VRNT) to gather more data points.

Now, we’re going to go over the new action regarding Fossil Group Inc (NASDAQ:FOSL).

Hedge fund activity in Fossil Group Inc (NASDAQ:FOSL)

At Q3’s end, a total of 29 of the hedge funds tracked by Insider Monkey were long this stock, a change of -12% from the second quarter. With the smart money’s sentiment swirling, there exists a select group of key hedge fund managers who were increasing their holdings substantially (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Eminence Capital, managed by Ricky Sandler, holds the number one position in Fossil Group Inc (NASDAQ:FOSL). Eminence Capital has a $165.9 million position in the stock, comprising 2.6% of its 13F portfolio. Coming in second is Wallace Weitz of Wallace R. Weitz & Co., with a $64.7 million position; the fund has 2% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism comprise Joel Greenblatt’s Gotham Asset Management, Frank Brosens’s Taconic Capital and Clifton S. Robbins’ Blue Harbour Group.

Because Fossil Group Inc (NASDAQ:FOSL) has faced declining sentiment from the aggregate hedge fund industry, it’s safe to say that there lies a certain “tier” of fund managers that elected to cut their full holdings by the end of the third quarter. Interestingly, Larry Robbins’ Glenview Capital sold off the biggest position of all the hedgies tracked by Insider Monkey, valued at an estimated $61.4 million in stock, and Michael Doheny’s Freshford Capital Management was right behind this move, as the fund dropped about $12.2 million worth. These bearish behaviors are important to note, as aggregate hedge fund interest was cut by 4 funds by the end of the third quarter.

Let’s go over hedge fund activity in other stocks similar to Fossil Group Inc (NASDAQ:FOSL). These stocks are Communications Sales & Leasing Inc (NASDAQ:CSAL), Central Fund of Canada Limited (USA) (NYSEAMEX:CEF), Verint Systems Inc. (NASDAQ:VRNT), and PBF Energy Inc (NYSE:PBF). All of these stocks’ market caps are similar to FOSL’s market cap.

As you can see these stocks had an average of 20 hedge funds with bullish positions and the average amount invested in these stocks was $313 million. That figure was $473 million in FOSL’s case. Verint Systems Inc. (NASDAQ:VRNT) is the most popular stock in this table. On the other hand Central Fund of Canada Limited (USA) (NYSEAMEX:CEF) is the least popular one with only 4 bullish hedge fund positions. Fossil Group Inc (NASDAQ:FOSL) is not the most popular stock in this group but hedge fund interest is still above average. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard VRNT might be a better candidate to consider a long position.