We are still in an overall bull market and many stocks that smart money investors were piling into surged through the end of November. Among them, Facebook and Microsoft ranked among the top 3 picks and these stocks gained 54% and 51% respectively. Hedge funds’ top 3 stock picks returned 41.7% this year and beat the S&P 500 ETFs by 14 percentage points. Investing in index funds guarantees you average returns, not superior returns. We are looking to generate superior returns for our readers. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Shoe Carnival, Inc. (NASDAQ:SCVL).
Is Shoe Carnival, Inc. (NASDAQ:SCVL) a safe investment right now? The smart money is in an optimistic mood. The number of bullish hedge fund bets moved up by 1 lately. Our calculations also showed that SCVL 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.
Today there are many formulas investors use to size up stocks. A pair of the less known formulas are hedge fund and insider trading moves. Our researchers have shown that, historically, those who follow the best picks of the elite money managers can outperform the S&P 500 by a very impressive margin (see the details here).
Chuck Royce of Royce & Associates
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. We’re going to go over the new hedge fund action surrounding Shoe Carnival, Inc. (NASDAQ:SCVL).
What does smart money think about Shoe Carnival, Inc. (NASDAQ:SCVL)?
At Q3’s end, a total of 15 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 7% from one quarter earlier. Below, you can check out the change in hedge fund sentiment towards SCVL 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.
Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the largest position in Shoe Carnival, Inc. (NASDAQ:SCVL). Royce & Associates has a $31.8 million position in the stock, comprising 0.3% of its 13F portfolio. The second most bullish fund manager is GMT Capital, led by Thomas E. Claugus, holding a $24 million position; the fund has 0.9% of its 13F portfolio invested in the stock. Remaining hedge funds and institutional investors with similar optimism consist of Paul Marshall and Ian Wace’s Marshall Wace, Mark Coe’s Intrinsic Edge Capital and Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital. In terms of the portfolio weights assigned to each position Intrinsic Edge Capital allocated the biggest weight to Shoe Carnival, Inc. (NASDAQ:SCVL), around 1.01% of its 13F portfolio. GMT Capital is also relatively very bullish on the stock, earmarking 0.89 percent of its 13F equity portfolio to SCVL.
Consequently, key money managers were leading the bulls’ herd. Intrinsic Edge Capital, managed by Mark Coe, created the biggest position in Shoe Carnival, Inc. (NASDAQ:SCVL). Intrinsic Edge Capital had $9.1 million invested in the company at the end of the quarter. Philippe Laffont’s Coatue Management also made a $1.5 million investment in the stock during the quarter. The other funds with new positions in the stock are Lee Ainslie’s Maverick Capital, Mike Vranos’s Ellington, and Donald Sussman’s Paloma Partners.
Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as Shoe Carnival, Inc. (NASDAQ:SCVL) but similarly valued. These stocks are Entercom Communications Corp. (NYSE:ETM), Merchants Bancorp (NASDAQ:MBIN), Chico’s FAS, Inc. (NYSE:CHS), and FRP Holdings Inc (NASDAQ:FRPH). This group of stocks’ market values resemble SCVL’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| ETM | 18 | 46488 | -1 |
| MBIN | 8 | 8102 | 2 |
| CHS | 14 | 57946 | 1 |
| FRPH | 8 | 39496 | 1 |
| Average | 12 | 38008 | 0.75 |
View table here if you experience formatting issues.
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 $38 million. That figure was $102 million in SCVL’s case. Entercom Communications Corp. (NYSE:ETM) is the most popular stock in this table. On the other hand Merchants Bancorp (NASDAQ:MBIN) is the least popular one with only 8 bullish hedge fund positions. Shoe Carnival, Inc. (NASDAQ:SCVL) is not the most popular stock in this group but hedge fund interest is still above average. 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. Hedge funds were also right about betting on SCVL, though not to the same extent, as the stock returned 9.8% during the first two months of the fourth quarter and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.
