Hedge Funds Are Buying Saks Inc (SKS)

Saks Inc (NYSE:SKS) has seen an increase in enthusiasm from smart money lately.

According to most shareholders, hedge funds are viewed as underperforming, old investment vehicles of years past. While there are greater than 8000 funds trading at the moment, we at Insider Monkey look at the aristocrats of this club, around 450 funds. It is estimated that this group has its hands on the lion’s share of the smart money’s total capital, and by watching their best stock picks, we have unsheathed a few investment strategies that have historically outperformed the broader indices. Our small-cap hedge fund strategy outpaced the S&P 500 index by 18 percentage points annually for a decade in our back tests, and since we’ve started sharing our picks with our subscribers at the end of August 2012, we have topped the S&P 500 index by 23.3 percentage points in 8 months (check out a sample of our picks).

Just as beneficial, optimistic insider trading activity is another way to parse down the financial markets. Obviously, there are plenty of reasons for a corporate insider to drop shares of his or her company, but just one, very clear reason why they would behave bullishly. Many empirical studies have demonstrated the market-beating potential of this method if piggybackers know where to look (learn more here).

With all of this in mind, let’s take a gander at the key action encompassing Saks Inc (NYSE:SKS).

How are hedge funds trading Saks Inc (NYSE:SKS)?

In preparation for this quarter, a total of 13 of the hedge funds we track were bullish in this stock, a change of 8% from the first quarter. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were increasing their holdings substantially.

Of the funds we track, Southeastern Asset Management, managed by Mason Hawkins, holds the biggest 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; the fund has 0.2% of its 13F portfolio invested in the stock. Other hedge funds that are bullish include Bruce Kovner’s Caxton Associates LP, and Steven Owsley’s Madison Street Partners.

As aggregate interest increased, specific money managers were leading the bulls’ herd. Caxton Associates LP, managed by Bruce Kovner, assembled the most outsized 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 other funds with brand new SKS positions are Ken Griffin’s Citadel Investment Group, Matthew Hulsizer’s PEAK6 Capital Management, and Nick Niell’s Arrowgrass Capital Partners.

How are insiders trading 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 last 180-day time frame, Saks Inc (NYSE:SKS) has experienced zero unique insiders purchasing, and 6 insider sales (see the details of insider trades here).

Let’s also take a look at 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). This group of stocks are in the department stores industry and their market caps resemble SKS’s market cap.

With the returns shown by our strategies, retail investors must always monitor hedge fund and insider trading sentiment, and Saks Inc (NYSE:SKS) is no exception.

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