It is already common knowledge that individual investors do not usually have the necessary resources and abilities to properly research an investment opportunity. As a result, most investors pick their illusory “winners” by making a superficial analysis and research that leads to poor performance on aggregate. The Standard and Poor’s 500 Index returned 7.6% over the 12-month period ending November 21, while more than 51% of the constituents of the index underperformed the benchmark. Hence, a random stock picking process will most likely lead to disappointment. At the same time, the 30 most favored mid-cap stocks by the best performing hedge funds monitored by Insider Monkey generated a return of 18% over the same time span. Of course, hedge funds do make wrong bets on some occasions and these get disproportionately publicized on financial media, but piggybacking their moves can beat the broader market on average. That’s why we are going to go over recent hedge fund activity in Genesco Inc. (NYSE:GCO).
Genesco Inc. (NYSE:GCO) investors should pay attention to an increase in activity from the world’s largest hedge funds recently. There were 11 hedge funds in our database with GCO holdings at the end of the previous quarter. At the end of this article we will also compare GCO to other stocks including Knoll Inc (NYSE:KNL), Frontline Ltd (NYSE:FRO), and Quotient Technology Inc(NYSE:QUOT) to get a better sense of its popularity.
At Insider Monkey, we’ve developed an investment strategy that has delivered market-beating returns over the past 12 months. Our strategy identifies the 100 best-performing funds of the previous quarter from among the collection of 700+ successful funds that we track in our database, which we accomplish using our returns methodology. We then study the portfolios of those 100 funds using the latest 13F data to uncover the 30 most popular mid-cap stocks (market caps of between $1 billion and $10 billion) among them to hold until the next filing period. This strategy delivered 18% gains over the past 12 months, more than doubling the 8% returns enjoyed by the S&P 500 ETFs.
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With all of this in mind, let’s go over the new action regarding Genesco Inc. (NYSE:GCO).
What have hedge funds been doing with Genesco Inc. (NYSE:GCO)?
At Q3’s end, a total of 13 of the hedge funds tracked by Insider Monkey were bullish on this stock, a jump of 18% from the second quarter of 2016. The graph below displays the number of hedge funds with bullish position in GCO over the last 5 quarters. So, let’s review which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Chuck Royce of Royce & Associates holds the most valuable position in Genesco Inc. (NYSE:GCO). According to regulatory filings, the fund has a $53.3 million position in the stock. The second most bullish fund manager is John Overdeck and David Siegel’s Two Sigma Advisors, holding a $3.4 million position. Some other hedge funds and institutional investors that hold long positions consist of Cliff Asness’ AQR Capital Management, Neil Chriss’ Hutchin Hill Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.
As aggregate interest increased, specific money managers were leading the bulls’ herd. Two Sigma Advisors created the most outsized position in Genesco Inc. (NYSE:GCO). Neil Chriss’ Hutchin Hill Capital also initiated a $1.3 million position during the quarter. The following funds were also among the new GCO investors: Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital, George Hall’s Clinton Group, and Joshua Packwood and Schuster Tanger’s Radix Partners.
Let’s also examine hedge fund activity in other stocks similar to Genesco Inc. (NYSE:GCO). We will take a look at Knoll Inc (NYSE:KNL), Frontline Ltd (NYSE:FRO), Quotient Technology Inc(NYSE:QUOT), and Trade Desk Inc (NASDAQ:TTD). All of these stocks’ market caps resemble GCO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| KNL | 16 | 48056 | -4 |
| FRO | 9 | 8674 | -2 |
| QUOT | 15 | 41797 | 8 |
| TTD | 9 | 10656 | 9 |
As you can see these stocks had an average of 12 hedge funds with bullish positions and the average amount invested in these stocks was $27 million. That figure was $65 million in GCO’s case. Knoll Inc (NYSE:KNL) is the most popular stock in this table. On the other hand Frontline Ltd (NYSE:FRO) is the least popular one with only 9 bullish hedge fund positions. Genesco Inc. (NYSE:GCO) 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 KNL might be a better candidate to consider taking a long position in.
Disclosure: None
