Does Crocs, Inc. (NASDAQ:CROX) represent a good buying opportunity at the moment? Let’s briefly check the hedge fund interest towards the company. Hedge fund firms constantly search out bright intellectuals and highly-experienced employees and throw away millions of dollars on research activities, so it is no wonder why they tend to generate millions in profits each year. It is also true that some hedge fund players fail unconceivably on some occasions, but their stock picks have been generating superior risk-adjusted returns on average over the years.
Is Crocs, Inc. (NASDAQ:CROX) a buy, sell, or hold? Prominent investors are becoming more confident. The number of long hedge fund bets rose by 9 in recent months. Our calculations also showed that CROX isn’t among the 30 most popular stocks among hedge funds. CROX was in 27 hedge funds’ portfolios at the end of September. There were 18 hedge funds in our database with CROX positions at the end of the previous quarter.
Why do we pay any attention at all to hedge fund sentiment? Our research has shown that hedge funds’ large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 18 percentage points since May 2014 through December 3, 2018 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 24% through December 3, 2018. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Let’s review the recent hedge fund action encompassing Crocs, Inc. (NASDAQ:CROX).
How have hedgies been trading Crocs, Inc. (NASDAQ:CROX)?
Heading into the fourth quarter of 2018, a total of 27 of the hedge funds tracked by Insider Monkey were bullish on this stock, a change of 50% from the second quarter of 2018. By comparison, 21 hedge funds held shares or bullish call options in CROX heading into this year. With the smart money’s sentiment swirling, there exists an “upper tier” of notable hedge fund managers who were upping their stakes considerably (or already accumulated large positions).
Among these funds, Renaissance Technologies held the most valuable stake in Crocs, Inc. (NASDAQ:CROX), which was worth $84.4 million at the end of the third quarter. On the second spot was D E Shaw which amassed $28 million worth of shares. Moreover, Two Sigma Advisors, Driehaus Capital, and Maverick Capital were also bullish on Crocs, Inc. (NASDAQ:CROX), allocating a large percentage of their portfolios to this stock.
As aggregate interest increased, specific money managers were breaking ground themselves. Marshall Wace LLP, managed by Paul Marshall and Ian Wace, created the most outsized position in Crocs, Inc. (NASDAQ:CROX). Marshall Wace LLP had $4 million invested in the company at the end of the quarter. Louis Bacon’s Moore Global Investments also made a $3.6 million investment in the stock during the quarter. The other funds with new positions in the stock are Dmitry Balyasny’s Balyasny Asset Management, Philippe Laffont’s Coatue Management, and Daniel S. Och’s OZ Management.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Crocs, Inc. (NASDAQ:CROX) but similarly valued. We will take a look at Neenah, Inc. (NYSE:NP), OneSmart International Education Group Limited (NYSE:ONE), Patrick Industries, Inc. (NASDAQ:PATK), and Carbon Black, Inc. (NASDAQ:CBLK). This group of stocks’ market valuations match CROX’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NP | 7 | 33707 | 0 |
| ONE | 5 | 11050 | -1 |
| PATK | 18 | 103900 | -3 |
| CBLK | 9 | 20312 | -4 |
| Average | 9.75 | 42 | -2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 9.75 hedge funds with bullish positions and the average amount invested in these stocks was $42 million. That figure was $255 million in CROX’s case. Patrick Industries, Inc. (NASDAQ:PATK) is the most popular stock in this table. On the other hand OneSmart International Education Group Limited (NYSE:ONE) is the least popular one with only 5 bullish hedge fund positions. Compared to these stocks Crocs, Inc. (NASDAQ:CROX) is more popular among hedge funds. Considering that hedge funds are fond of this stock in relation to its market cap peers, it may be a good idea to analyze it in detail and potentially include it in your portfolio.
Disclosure: None. This article was originally published at Insider Monkey.
