Hedge Funds Have Never Been This Bullish On Guess’, Inc. (GES)

In this article we will check out the progression of hedge fund sentiment towards Guess’, Inc. (NYSE:GES) and determine whether it is a good investment right now. We at Insider Monkey like to examine what billionaires and hedge funds think of a company before spending days of research on it. Given their 2 and 20 payment structure, hedge funds have more incentives and resources than the average investor. The funds have access to expert networks and get tips from industry insiders. They also employ numerous Ivy League graduates and MBAs. Like everyone else, hedge funds perform miserably at times, but their consensus picks have historically outperformed the market after risk adjustments.

Guess’, Inc. (NYSE:GES) has experienced an increase in activity from the world’s largest hedge funds of late. Guess’, Inc. (NYSE:GES) was in 25 hedge funds’ portfolios at the end of June. The all time high for this statistic was previously 20. This means the bullish number of hedge fund positions in this stock currently sits at its all time high. There were 20 hedge funds in our database with GES positions at the end of the first quarter. Our calculations also showed that GES isn’t among the 30 most popular stocks among hedge funds (click for Q2 rankings).

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. Hedge funds have more than $3.5 trillion in assets under management, so you can’t expect their entire portfolios to beat the market by large margins. Our research was able to identify in advance a select group of hedge fund holdings that outperformed the S&P 500 ETFs by more than 79 percentage points since March 2017 (see the details here). So you can still find a lot of gems by following hedge funds’ moves today.

Chuck Royce of Royce & Associates

At Insider Monkey, we scour multiple sources to uncover the next great investment idea. For example, lithium mining is one of the fastest growing industries right now, so we are checking out stock pitches like this emerging lithium stock. We go through lists like the 10 best EV stocks to pick the next Tesla that will deliver a 10x return. Even though we recommend positions in only a tiny fraction of the companies we analyze, we check out as many stocks as we can. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. You can subscribe to our free daily newsletter on our homepage. Now let’s check out the fresh hedge fund action regarding Guess’, Inc. (NYSE:GES).

Do Hedge Funds Think GES Is A Good Stock To Buy Now?

At Q2’s end, a total of 25 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 25% from the first quarter of 2020. By comparison, 18 hedge funds held shares or bullish call options in GES a year ago. So, let’s find out 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, Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, holds the most valuable position in Guess’, Inc. (NYSE:GES). Arrowstreet Capital has a $22 million position in the stock, comprising less than 0.1%% of its 13F portfolio. Sitting at the No. 2 spot is D. E. Shaw of D E Shaw, with a $20.3 million position; the fund has less than 0.1%% of its 13F portfolio invested in the stock. Remaining professional money managers that are bullish encompass Israel Englander’s Millennium Management, Israel Englander’s Millennium Management and Chuck Royce’s Royce & Associates. In terms of the portfolio weights assigned to each position Contrarius Investment Management allocated the biggest weight to Guess’, Inc. (NYSE:GES), around 0.23% of its 13F portfolio. Shellback Capital is also relatively very bullish on the stock, setting aside 0.21 percent of its 13F equity portfolio to GES.

As industrywide interest jumped, some big names have jumped into Guess’, Inc. (NYSE:GES) headfirst. Royce & Associates, managed by Chuck Royce, created the biggest position in Guess’, Inc. (NYSE:GES). Royce & Associates had $7.6 million invested in the company at the end of the quarter. Dmitry Balyasny’s Balyasny Asset Management also made a $7 million investment in the stock during the quarter. The other funds with new positions in the stock are Renaissance Technologies, Doug Gordon, Jon Hilsabeck and Don Jabro’s Shellback Capital, and Paul Marshall and Ian Wace’s Marshall Wace LLP.

Let’s check out hedge fund activity in other stocks similar to Guess’, Inc. (NYSE:GES). These stocks are Cardiovascular Systems Inc (NASDAQ:CSII), M/I Homes Inc (NYSE:MHO), Immunocore Holdings plc (NASDAQ:IMCR), Industrial Logistics Properties Trust (NASDAQ:ILPT), GCP Applied Technologies Inc. (NYSE:GCP), Meritor Inc (NYSE:MTOR), and Unisys Corporation (NYSE:UIS). This group of stocks’ market caps are closest to GES’s market cap.

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As you can see these stocks had an average of 14.4 hedge funds with bullish positions and the average amount invested in these stocks was $162 million. That figure was $124 million in GES’s case. Meritor Inc (NYSE:MTOR) is the most popular stock in this table. On the other hand Industrial Logistics Properties Trust (NASDAQ:ILPT) is the least popular one with only 6 bullish hedge fund positions. Compared to these stocks Guess’, Inc. (NYSE:GES) is more popular among hedge funds. Our overall hedge fund sentiment score for GES is 90. Stocks with higher number of hedge fund positions relative to other stocks as well as relative to their historical range receive a higher sentiment score. Our calculations showed that top 5 most popular stocks among hedge funds returned 95.8% in 2019 and 2020, and outperformed the S&P 500 ETF (SPY) by 40 percentage points. These stocks gained 24% in 2021 through October 22nd and still beat the market by 1.6 percentage points. Unfortunately GES wasn’t nearly as popular as these 5 stocks and hedge funds that were betting on GES were disappointed as the stock returned -22.9% since the end of the second quarter (through 10/22) and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 5 most popular stocks among hedge funds as most of these stocks already outperformed the market since 2019.

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Disclosure: None. This article was originally published at Insider Monkey.