Hedge Funds Are Betting On 1-800-FLOWERS.COM, Inc. (FLWS)

Hedge Funds and other institutional investors have just completed filing their 13Fs with the Securities and Exchange Commission, revealing their equity portfolios as of the end of June. At Insider Monkey, we follow nearly 900 active hedge funds and notable investors and by analyzing their 13F filings, we can determine the stocks that they are collectively bullish on. One of their picks is 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), so let’s take a closer look at the sentiment that surrounds it in the current quarter.

Is 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) a good stock to buy now? Money managers were taking a bullish view. The number of bullish hedge fund bets rose by 2 lately. 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) was in 24 hedge funds’ portfolios at the end of June. The all time high for this statistic is 27. Our calculations also showed that FLWS isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by 79 percentage points since March 2017 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.

Mario Gabelli of GAMCO Investors

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. 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. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. With all of this in mind we’re going to view the latest hedge fund action regarding 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS).

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

At Q2’s end, a total of 24 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 9% from one quarter earlier. On the other hand, there were a total of 23 hedge funds with a bullish position in FLWS a year ago. With the smart money’s sentiment swirling, there exists a few key hedge fund managers who were boosting their stakes significantly (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Mario Gabelli’s GAMCO Investors has the most valuable position in 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), worth close to $18.2 million, corresponding to 0.2% of its total 13F portfolio. Sitting at the No. 2 spot is Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $18.2 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism encompass Renaissance Technologies, Israel Englander’s Millennium Management and Ken Griffin’s Citadel Investment Group. In terms of the portfolio weights assigned to each position Beddow Capital Management allocated the biggest weight to 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS), around 2.09% of its 13F portfolio. Horseman Capital Management is also relatively very bullish on the stock, setting aside 1.34 percent of its 13F equity portfolio to FLWS.

Now, specific money managers were breaking ground themselves. Nishkama Capital, managed by Ravee Mehta, established the largest position in 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS). Nishkama Capital had $4.5 million invested in the company at the end of the quarter. Steven Baughman’s Divisar Capital also made a $2.8 million investment in the stock during the quarter. The other funds with brand new FLWS positions are Chuck Royce’s Royce & Associates, Blair Baker’s Precept Capital Management, and Greg Eisner’s Engineers Gate Manager.

Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) but similarly valued. These stocks are GMS Inc. (NYSE:GMS), USANA Health Sciences, Inc. (NYSE:USNA), Translate Bio, Inc. (NASDAQ:TBIO), Two Harbors Investment Corp (NYSE:TWO), Establishment Labs Holdings Inc. (NASDAQ:ESTA), PennyMac Mortgage Investment Trust (NYSE:PMT), and B. Riley Financial, Inc. (NASDAQ:RILY). This group of stocks’ market values are closest to FLWS’s market value.

View table here if you experience formatting issues.

As you can see these stocks had an average of 19.9 hedge funds with bullish positions and the average amount invested in these stocks was $271 million. That figure was $93 million in FLWS’s case. Two Harbors Investment Corp (NYSE:TWO) is the most popular stock in this table. On the other hand PennyMac Mortgage Investment Trust (NYSE:PMT) is the least popular one with only 11 bullish hedge fund positions. 1-800-FLOWERS.COM, Inc. (NASDAQ:FLWS) is not the most popular stock in this group but hedge fund interest is still above average. Our overall hedge fund sentiment score for FLWS is 67.9. 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. This is a slightly positive signal but we’d rather spend our time researching stocks that hedge funds are piling on. 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 24% in 2021 through October 22nd and beat the market again by 1.6 percentage points. Unfortunately FLWS wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on FLWS were disappointed as the stock returned -8.8% since the end of June (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as many of these stocks already outperformed the market since 2019.

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