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

In the eyes of many of your fellow readers, hedge funds are viewed as delayed, old financial vehicles of a period lost to current times. Although there are In excess of 8,000 hedge funds trading currently, this site looks at the top tier of this club, close to 525 funds. It is widely held that this group oversees the majority of all hedge funds’ total capital, and by monitoring their highest quality picks, we’ve determined a few investment strategies that have historically beaten the broader indices. Our small-cap hedge fund strategy beat the S&P 500 index by 18 percentage points per year for a decade in our back tests, and since we’ve began to sharing our picks with our subscribers at the end of August 2012, we have beaten the S&P 500 index by 33 percentage points in 11 months (explore the details and some picks here).

Equally as necessary, positive insider trading sentiment is a second way to look at the financial markets. Obviously, there are a variety of reasons for an upper level exec to downsize shares of his or her company, but only one, very obvious reason why they would buy. Plenty of academic studies have demonstrated the impressive potential of this strategy if shareholders know where to look (learn more here).

Now that that’s out of the way, it’s important to study the recent info surrounding Fossil Inc (NASDAQ:FOSL).

Hedge fund activity in Fossil Inc (NASDAQ:FOSL)

Heading into Q3, a total of 25 of the hedge funds we track were long in this stock, a change of 0% from the previous quarter. With hedge funds’ capital changing hands, there exists a few key hedge fund managers who were boosting their holdings substantially.

When using filings from the hedgies we track, Ricky Sandler’s Eminence Capital had the largest position in Fossil Inc (NASDAQ:FOSL), worth close to $133.2 million, accounting for 3.3% of its total 13F portfolio. The second largest stake is held by Steven Cohen of SAC Capital Advisors, with a $93.9 million position; the fund has 0.5% of its 13F portfolio invested in the stock. Remaining hedgies with similar optimism include Patrick McCormack’s Tiger Consumer Management, D. E. Shaw’s D E Shaw and Larry Robbins’s Glenview Capital.

Since Fossil Inc (NASDAQ:FOSL) has witnessed bearish sentiment from the smart money’s best and brightest, it’s safe to say that there exists a select few hedgies who sold off their entire stakes last quarter. It’s worth mentioning that Alexander Mitchell’s Scopus Asset Management cut the largest position of the 450+ funds we track, comprising about $16.4 million in call options.. Alexander Mitchell’s fund, Scopus Asset Management, also cut its call options., about $14.5 million worth. These transactions are important to note, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

Insider trading activity in Fossil Inc (NASDAQ:FOSL)

Legal insider trading, particularly when it’s bullish, is best served when the company in focus has seen transactions within the past six months. Over the latest 180-day time period, Fossil Inc (NASDAQ:FOSL) has seen zero unique insiders buying, and zero insider sales (see the details of insider trades here).

We’ll check out the relationship between both of these indicators in other stocks similar to Fossil Inc (NASDAQ:FOSL). These stocks are Steinway Musical Instruments Inc (NYSE:LVB), Movado Group, Inc (NYSE:MOV), SHFL entertainment Inc (NASDAQ:SHFL), Manchester United PLC (NYSE:MANU), and Brunswick Corporation (NYSE:BC). All of these stocks are in the recreational goods, other industry and their market caps are similar to FOSL’s market cap.

Using the results explained by the previously mentioned studies, average investors must always pay attention to hedge fund and insider trading sentiment, and Fossil Inc (NASDAQ:FOSL) shareholders fit into this picture quite nicely.

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