The Insider Monkey team has completed processing the quarterly 13F filings for the September quarter submitted by the hedge funds and other money managers included in our extensive database. Most hedge fund investors experienced strong gains on the back of a strong market performance, which certainly propelled them to adjust their equity holdings so as to maintain the desired risk profile. As a result, the relevancy of these public filings and their content is indisputable, as they may reveal numerous high-potential stocks. The following article will discuss the smart money sentiment towards Zumiez Inc. (NASDAQ:ZUMZ).
Zumiez Inc. (NASDAQ:ZUMZ) investors should be aware of an increase in support from the world’s most elite money managers recently. ZUMZ was in 18 hedge funds’ portfolios at the end of the third quarter of 2019. There were 16 hedge funds in our database with ZUMZ holdings at the end of the previous quarter. Our calculations also showed that ZUMZ 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.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still 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 underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
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. We’re going to take a look at the recent hedge fund action surrounding Zumiez Inc. (NASDAQ:ZUMZ).
How are hedge funds trading Zumiez Inc. (NASDAQ:ZUMZ)?
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 13% from one quarter earlier. On the other hand, there were a total of 17 hedge funds with a bullish position in ZUMZ a year ago. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
When looking at the institutional investors followed by Insider Monkey, Maverick Capital, managed by Lee Ainslie, holds the biggest position in Zumiez Inc. (NASDAQ:ZUMZ). Maverick Capital has a $16.5 million position in the stock, comprising 0.2% of its 13F portfolio. Sitting at the No. 2 spot is Dmitry Balyasny of Balyasny Asset Management, with a $12.9 million position; 0.1% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that hold long positions consist of Ken Griffin’s Citadel Investment Group, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital and Cliff Asness’s AQR Capital Management. In terms of the portfolio weights assigned to each position Algert Coldiron Investors allocated the biggest weight to Zumiez Inc. (NASDAQ:ZUMZ), around 0.61% of its 13F portfolio. Granite Point Capital is also relatively very bullish on the stock, setting aside 0.25 percent of its 13F equity portfolio to ZUMZ.
Several hedge funds initiated small positions in the stock during the third quarter. So, even though hedge fund sentiment is improving, this didn’t translate into large purchases. The two hedge funds with the biggest new positions were quant hedge fund Two Sigma and Granite Point Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Zumiez Inc. (NASDAQ:ZUMZ) but similarly valued. These stocks are Cango Inc. (NYSE:CANG), istar Inc (NYSE:STAR), Central Pacific Financial Corp. (NYSE:CPF), and Goldman Sachs BDC, Inc. (NYSE:GSBD). This group of stocks’ market caps are similar to ZUMZ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| CANG | 1 | 306 | 0 |
| STAR | 14 | 91186 | 9 |
| CPF | 15 | 74851 | 3 |
| GSBD | 2 | 3362 | 1 |
| Average | 8 | 42426 | 3.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 8 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $77 million in ZUMZ’s case. Central Pacific Financial Corp. (NYSE:CPF) is the most popular stock in this table. On the other hand Cango Inc. (NYSE:CANG) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Zumiez Inc. (NASDAQ:ZUMZ) is more popular among hedge funds. 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 ZUMZ wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on ZUMZ were disappointed as the stock returned -6.8% during the first two months of the fourth quarter 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 70 percent of these stocks already outperformed the market in Q4.
Disclosure: None. This article was originally published at Insider Monkey.
