Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the third quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4 years and analyze what the smart money thinks of Genesco Inc. (NYSE:GCO) based on that data.
Genesco Inc. (NYSE:GCO) has experienced an increase in hedge fund sentiment recently. Our calculations also showed that GCO isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings).
Video: Click the image to watch our video about the top 5 most popular hedge fund stocks.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the Russell 2000 ETFs by 40 percentage points since May 2014 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Lee Ainslie of Maverick Capital
We leave no stone unturned when looking for the next great investment idea. For example Europe is set to become the world’s largest cannabis market, so we check out this European marijuana stock pitch. One of the most bullish analysts in America just put his money where his mouth is. He says, “I’m investing more today than I did back in early 2009.” So we check out his pitch. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. We also rely on the best performing hedge funds‘ buy/sell signals. Let’s take a peek at the recent hedge fund action encompassing Genesco Inc. (NYSE:GCO).
Hedge fund activity in Genesco Inc. (NYSE:GCO)
At the end of the third quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 6% from the second quarter of 2019. Below, you can check out the change in hedge fund sentiment towards GCO over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Millennium Management, managed by Israel Englander, holds the biggest position in Genesco Inc. (NYSE:GCO). Millennium Management has a $15.5 million position in the stock, comprising less than 0.1%% of its 13F portfolio. The second largest stake is held by Peter Rathjens, Bruce Clarke and John Campbell of Arrowstreet Capital, with a $11.8 million position; less than 0.1%% of its 13F portfolio is allocated to the stock. Other members of the smart money that hold long positions consist of Ken Griffin’s Citadel Investment Group, David E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Gotham Asset Management allocated the biggest weight to Genesco Inc. (NYSE:GCO), around 0.05% of its 13F portfolio. ExodusPoint Capital is also relatively very bullish on the stock, designating 0.05 percent of its 13F equity portfolio to GCO.
As industrywide interest jumped, specific money managers have been driving this bullishness. Maverick Capital, managed by Lee Ainslie, assembled the biggest position in Genesco Inc. (NYSE:GCO). Maverick Capital had $2.2 million invested in the company at the end of the quarter. Paul Marshall and Ian Wace’s Marshall Wace also initiated a $1.1 million position during the quarter. The following funds were also among the new GCO investors: Paul Tudor Jones’s Tudor Investment Corp, Benjamin A. Smith’s Laurion Capital Management, and Jonathan Soros’s JS Capital.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Genesco Inc. (NYSE:GCO) but similarly valued. We will take a look at QCR Holdings, Inc. (NASDAQ:QCRH), Cars.com Inc. (NYSE:CARS), SMART Global Holdings, Inc. (NASDAQ:SGH), and Fiverr International Ltd. (NYSE:FVRR). This group of stocks’ market valuations resemble GCO’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| QCRH | 9 | 64083 | 1 |
| CARS | 31 | 171735 | 2 |
| SGH | 17 | 285893 | 7 |
| FVRR | 5 | 9126 | -4 |
| Average | 15.5 | 132709 | 1.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 15.5 hedge funds with bullish positions and the average amount invested in these stocks was $133 million. That figure was $60 million in GCO’s case. Cars.com Inc. (NYSE:CARS) is the most popular stock in this table. On the other hand Fiverr International Ltd. (NYSE:FVRR) is the least popular one with only 5 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. Our calculations showed that top 20 most popular stocks among hedge funds returned 37.4% in 2019 through the end of November and outperformed the S&P 500 ETF (SPY) by 9.9 percentage points. Unfortunately GCO wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on GCO were disappointed as the stock returned -7.2% during the fourth quarter (through the end of November) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as many of these stocks already outperformed the market so far this year.
Disclosure: None. This article was originally published at Insider Monkey.
