The latest 13F reporting period has come and gone, and Insider Monkey is again at the forefront when it comes to making use of this gold mine of data. We at Insider Monkey have plowed through 752 13F filings that hedge funds and well-known value investors are required to file by the SEC. The 13F filings show the funds’ and investors’ portfolio positions as of September 30th. In this article we look at what those investors think of Designer Brands Inc. (NYSE:DBI).
Designer Brands Inc. (NYSE:DBI) was in 19 hedge funds’ portfolios at the end of September. DBI investors should be aware of an increase in activity from the world’s largest hedge funds in recent months. There were 16 hedge funds in our database with DBI holdings at the end of the previous quarter. Our calculations also showed that DBI 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.
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 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’ll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.8% through November 21, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
Steve Leonard of Pacifica Capital
Unlike the largest US hedge funds that are convinced Dow will soar past 40,000 or the world’s most bearish hedge fund that’s more convinced than ever that a crash is coming, our long-short investment strategy doesn’t rely on bull or bear markets to deliver double digit returns. We only rely on the best performing hedge funds‘ buy/sell signals. Let’s review the fresh hedge fund action encompassing Designer Brands Inc. (NYSE:DBI).
Hedge fund activity in Designer Brands Inc. (NYSE:DBI)
At the end of the third quarter, a total of 19 of the hedge funds tracked by Insider Monkey were long this stock, a change of 19% from the previous quarter. The graph below displays the number of hedge funds with bullish position in DBI over the last 17 quarters. So, let’s check out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Royce & Associates held the most valuable stake in Designer Brands Inc. (NYSE:DBI), which was worth $26.9 million at the end of the third quarter. On the second spot was Arrowstreet Capital which amassed $20.5 million worth of shares. Masters Capital Management, Buckingham Capital Management, and Citadel Investment Group were also very fond of the stock, becoming one of the largest hedge fund holders of the company. In terms of the portfolio weights assigned to each position Pacifica Capital Investments allocated the biggest weight to Designer Brands Inc. (NYSE:DBI), around 2.14% of its 13F portfolio. Buckingham Capital Management is also relatively very bullish on the stock, dishing out 1.44 percent of its 13F equity portfolio to DBI.
Consequently, key money managers were breaking ground themselves. Masters Capital Management, managed by Mike Masters, assembled the most outsized position in Designer Brands Inc. (NYSE:DBI). Masters Capital Management had $12 million invested in the company at the end of the quarter. Steve Leonard’s Pacifica Capital Investments also made a $4.5 million investment in the stock during the quarter. The following funds were also among the new DBI investors: George McCabe’s Portolan Capital Management, Steve Cohen’s Point72 Asset Management, and Joel Greenblatt’s Gotham Asset Management.
Let’s now take a look at hedge fund activity in other stocks similar to Designer Brands Inc. (NYSE:DBI). We will take a look at Safehold Inc. (NYSE:SAFE), G-III Apparel Group, Ltd. (NASDAQ:GIII), Eldorado Gold Corp (NYSE:EGO), and Gannett Co., Inc. (NYSE:GCI). All of these stocks’ market caps are similar to DBI’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| SAFE | 8 | 11924 | 5 |
| GIII | 12 | 80887 | -1 |
| EGO | 13 | 137318 | 3 |
| GCI | 17 | 168832 | 3 |
| Average | 12.5 | 99740 | 2.5 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 12.5 hedge funds with bullish positions and the average amount invested in these stocks was $100 million. That figure was $115 million in DBI’s case. Gannett Co., Inc. (NYSE:GCI) is the most popular stock in this table. On the other hand Safehold Inc. (NYSE:SAFE) is the least popular one with only 8 bullish hedge fund positions. Compared to these stocks Designer Brands Inc. (NYSE:DBI) 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 DBI wasn’t nearly as popular as these 20 stocks and hedge funds that were betting on DBI were disappointed as the stock returned -3.6% 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.