Hedge Funds Aren’t Crazy About DSW Inc. (DSW) Anymore

DSW Inc. (NYSE:DSW) was in 15 hedge funds’ portfolio at the end of the first quarter of 2013. DSW investors should pay attention to a decrease in activity from the world’s largest hedge funds recently. There were 17 hedge funds in our database with DSW positions at the end of the previous quarter.

At the moment, there are plenty of indicators investors can use to watch the equity markets. Two of the best are hedge fund and insider trading sentiment. At Insider Monkey, our research analyses have shown that, historically, those who follow the top picks of the elite fund managers can outpace the S&P 500 by a healthy margin (see just how much).

Equally as key, positive insider trading activity is another way to break down the investments you’re interested in. There are a number of incentives for a bullish insider to cut shares of his or her company, but only one, very clear reason why they would initiate a purchase. Several empirical studies have demonstrated the market-beating potential of this method if shareholders understand what to do (learn more here).

With these “truths” under our belt, let’s take a glance at the key action regarding DSW Inc. (NYSE:DSW).

How are hedge funds trading DSW Inc. (NYSE:DSW)?

At the end of the first quarter, a total of 15 of the hedge funds we track held long positions in this stock, a change of -12% from the previous quarter. With hedgies’ capital changing hands, there exists a select group of notable hedge fund managers who were increasing their stakes substantially.

Of the funds we track, Citadel Investment Group, managed by Ken Griffin, holds the most valuable position in DSW Inc. (NYSE:DSW). Citadel Investment Group has a $23.3 million position in the stock, comprising less than 0.1%% of its 13F portfolio. On Citadel Investment Group’s heels is Renaissance Technologies, managed by Jim Simons, which held a $23.2 million position; 0.1% of its 13F portfolio is allocated to the stock. Remaining hedge funds with similar optimism include Israel Englander’s Millennium Management, Donald Chiboucis’s Columbus Circle Investors and Malcolm Fairbairn’s Ascend Capital.

Seeing as DSW Inc. (NYSE:DSW) has experienced declining sentiment from hedge fund managers, we can see that there exists a select few hedgies who sold off their positions entirely heading into Q2. At the top of the heap, Steven Cohen’s SAC Capital Advisors cut the largest stake of all the hedgies we key on, valued at an estimated $26.3 million in call options. Jeffrey Vinik’s fund, Vinik Asset Management, also sold off its stock, about $12.8 million worth. These moves are intriguing to say the least, as aggregate hedge fund interest was cut by 2 funds heading into Q2.

How are insiders trading DSW Inc. (NYSE:DSW)?

Insider purchases made by high-level executives is most useful when the company in focus has seen transactions within the past 180 days. Over the last six-month time frame, DSW Inc. (NYSE:DSW) has experienced zero unique insiders purchasing, and 9 insider sales (see the details of insider trades here).

Let’s check out hedge fund and insider activity in other stocks similar to DSW Inc. (NYSE:DSW). These stocks are Abercrombie & Fitch Co. (NYSE:ANF), The Buckle, Inc. (NYSE:BKE), American Eagle Outfitters (NYSE:AEO), Chico’s FAS, Inc. (NYSE:CHS), and Ascena Retail Group Inc (NASDAQ:ASNA). This group of stocks belong to the apparel stores industry and their market caps resemble DSW’s market cap.