“Since 2006, value stocks (IVE vs IVW) have underperformed 11 of the 13 calendar years and when they beat growth, it wasn’t by much. Cumulatively, through this week, it has been a 122% differential (up 52% for value vs up 174% for growth). This appears to be the longest and most severe drought for value investors since data collection began. It will go our way eventually as there are too many people paying far too much for today’s darlings, both public and private. Further, the ten-year yield of 2.5% (pre-tax) isn’t attractive nor is real estate. We believe the value part of the global equity market is the only place to earn solid risk adjusted returns and we believe those returns will be higher than normal,” said Vilas Fund in its Q1 investor letter. We aren’t sure whether value stocks outperform growth, but we follow hedge fund investor letters to understand where the markets and stocks might be going. This article will lay out and discuss the hedge fund and institutional investor sentiment towards Express, Inc. (NYSE:EXPR).
Is Express, Inc. (NYSE:EXPR) ready to rally soon? Hedge funds are turning bullish. The number of long hedge fund bets improved by 1 recently. Our calculations also showed that EXPR isn’t among the 30 most popular stocks among hedge funds (click for Q3 rankings and see the video below for Q2 rankings). EXPR was in 14 hedge funds’ portfolios at the end of September. There were 13 hedge funds in our database with EXPR positions at the end of the previous quarter.
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.
Philippe Laffont of Coatue Management
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. Let’s take a look at the latest hedge fund action encompassing Express, Inc. (NYSE:EXPR).
What does smart money think about Express, Inc. (NYSE:EXPR)?
Heading into the fourth quarter of 2019, a total of 14 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from the previous quarter. The graph below displays the number of hedge funds with bullish position in EXPR over the last 17 quarters. So, let’s examine which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Divisar Capital held the most valuable stake in Express, Inc. (NYSE:EXPR), which was worth $18.8 million at the end of the third quarter. On the second spot was Renaissance Technologies which amassed $9.8 million worth of shares. Arrowstreet Capital, D E Shaw, and Stormborn Capital Management 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 Divisar Capital allocated the biggest weight to Express, Inc. (NYSE:EXPR), around 6.24% of its 13F portfolio. Stormborn Capital Management is also relatively very bullish on the stock, setting aside 1.09 percent of its 13F equity portfolio to EXPR.
With a general bullishness amongst the heavyweights, specific money managers were breaking ground themselves. Stormborn Capital Management, managed by Elise Di Vincenzo Crumbine, assembled the largest position in Express, Inc. (NYSE:EXPR). Stormborn Capital Management had $1.7 million invested in the company at the end of the quarter. Philippe Laffont’s Coatue Management also made a $0.6 million investment in the stock during the quarter. The other funds with brand new EXPR positions are Brian C. Freckmann’s Lyon Street Capital and Michael Gelband’s ExodusPoint Capital.
Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Express, Inc. (NYSE:EXPR) but similarly valued. These stocks are Mirum Pharmaceuticals, Inc. (NASDAQ:MIRM), LCNB Corp. (NASDAQ:LCNB), Apyx Medical Corporation (NASDAQ:APYX), and Spok Holdings Inc (NASDAQ:SPOK). This group of stocks’ market values are similar to EXPR’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| MIRM | 7 | 83998 | 7 |
| LCNB | 1 | 3680 | 0 |
| APYX | 8 | 34126 | 0 |
| SPOK | 11 | 26631 | 0 |
| Average | 6.75 | 37109 | 1.75 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 6.75 hedge funds with bullish positions and the average amount invested in these stocks was $37 million. That figure was $37 million in EXPR’s case. Spok Holdings Inc (NASDAQ:SPOK) is the most popular stock in this table. On the other hand LCNB Corp. (NASDAQ:LCNB) is the least popular one with only 1 bullish hedge fund positions. Compared to these stocks Express, Inc. (NYSE:EXPR) 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. Hedge funds were also right about betting on EXPR as the stock returned 14.2% during the first two months of Q4 and outperformed the market by an even larger margin. Hedge funds were clearly right about piling into this stock relative to other stocks with similar market capitalizations.
Disclosure: None. This article was originally published at Insider Monkey.
