Hedge Funds Are Betting On Saks Inc (SKS)

Is Saks Inc (NYSE:SKS) undervalued? The best stock pickers are taking an optimistic view. The number of long hedge fund bets moved up by 1 in recent months.

In the financial world, there are dozens of metrics market participants can use to watch stocks. A pair of the most innovative are hedge fund and insider trading interest. At Insider Monkey, our studies have shown that, historically, those who follow the best picks of the top investment managers can trounce their index-focused peers by a very impressive margin (see just how much).

Just as key, bullish insider trading activity is a second way to break down the investments you’re interested in. Just as you’d expect, there are a variety of motivations for a bullish insider to drop shares of his or her company, but only one, very clear reason why they would buy. Several empirical studies have demonstrated the valuable potential of this method if investors understand what to do (learn more here).

Now, we’re going to take a peek at the recent action encompassing Saks Inc (NYSE:SKS).

How have hedgies been trading Saks Inc (NYSE:SKS)?

Heading into Q2, a total of 13 of the hedge funds we track were long in this stock, a change of 8% from one quarter earlier. With the smart money’s capital changing hands, there exists an “upper tier” of noteworthy hedge fund managers who were upping their holdings considerably.

Of the funds we track, Southeastern Asset Management, managed by Mason Hawkins, holds the most valuable position in Saks Inc (NYSE:SKS). Southeastern Asset Management has a $296.4 million position in the stock, comprising 1.3% of its 13F portfolio. The second largest stake is held by Ken Fisher of Fisher Asset Management, with a $63 million position; 0.2% of its 13F portfolio is allocated to the stock. Some other peers that are bullish include Bruce Kovner’s Caxton Associates LP, and Steven Owsley’s Madison Street Partners.

Now, key money managers were breaking ground themselves. Caxton Associates LP, managed by Bruce Kovner, initiated the biggest call position in Saks Inc (NYSE:SKS). Caxton Associates LP had 22.9 million invested in the company at the end of the quarter. Daniel Arbess’s Xerion also initiated a $3.8 million position during the quarter. The following funds were also among the new SKS investors: Ken Griffin’s Citadel Investment Group, Matthew Hulsizer’s PEAK6 Capital Management, and Nick Niell’s Arrowgrass Capital Partners.

What do corporate executives and insiders think about Saks Inc (NYSE:SKS)?

Insider trading activity, especially when it’s bullish, is best served when the company in question has seen transactions within the past six months. Over the latest six-month time period, Saks Inc (NYSE:SKS) has seen zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to Saks Inc (NYSE:SKS). These stocks are Kohl’s Corporation (NYSE:KSS), Sears Holdings Corporation (NASDAQ:SHLD), Dillard’s, Inc. (NYSE:DDS), J.C. Penney Company, Inc. (NYSE:JCP), and Sears Hometown and Outlet Stores Inc (NASDAQ:SHOS). All of these stocks are in the department stores industry and their market caps are similar to SKS’s market cap.

With the returns exhibited by the aforementioned studies, everyday investors must always pay attention to hedge fund and insider trading sentiment, and Saks Inc (NYSE:SKS) is an important part of this process.

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