The government requires hedge funds and wealthy investors that crossed the $100 million equity holdings threshold are required to file a report that shows their positions at the end of every quarter. Even though it isn’t the intention, these filings level the playing field for ordinary investors. The latest round of 13F filings disclosed the funds’ positions on December 31. We at Insider Monkey have made an extensive database of nearly 750 of those elite funds and prominent investors’ filings. In this article, we analyze how these elite funds and prominent investors traded Lands’ End, Inc. (NASDAQ:LE) based on those filings.
Lands’ End, Inc. (NASDAQ:LE) was in 13 hedge funds’ portfolios at the end of December. LE has seen a decrease in support from the world’s most elite money managers in recent months. There were 14 hedge funds in our database with LE positions at the end of the previous quarter. Our calculations also showed that LE isn’t among the 30 most popular stocks among hedge funds.
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 32 percentage points since May 2014 through March 12, 2019 (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 27.5% through March 12, 2019. That’s why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.
We’re going to check out the key hedge fund action surrounding Lands’ End, Inc. (NASDAQ:LE).
What have hedge funds been doing with Lands’ End, Inc. (NASDAQ:LE)?
At Q4’s end, a total of 13 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -7% from the second quarter of 2018. The graph below displays the number of hedge funds with bullish position in LE over the last 14 quarters. With hedge funds’ sentiment swirling, there exists a select group of noteworthy hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).
More specifically, ESL Investments was the largest shareholder of Lands’ End, Inc. (NASDAQ:LE), with a stake worth $80.2 million reported as of the end of December. Trailing ESL Investments was Renaissance Technologies, which amassed a stake valued at $2.3 million. Citadel Investment Group, AQR Capital Management, and GAMCO Investors were also very fond of the stock, giving the stock large weights in their portfolios.
Due to the fact that Lands’ End, Inc. (NASDAQ:LE) has witnessed declining sentiment from the aggregate hedge fund industry, we can see that there was a specific group of funds that elected to cut their full holdings last quarter. Intriguingly, Peter Rathjens, Bruce Clarke and John Campbell’s Arrowstreet Capital dropped the largest position of all the hedgies followed by Insider Monkey, valued at about $1 million in stock, and Joel Greenblatt’s Gotham Asset Management was right behind this move, as the fund dropped about $0.5 million worth. These transactions are interesting, as aggregate hedge fund interest was cut by 1 funds last quarter.
Let’s go over hedge fund activity in other stocks – not necessarily in the same industry as Lands’ End, Inc. (NASDAQ:LE) but similarly valued. We will take a look at BioScrip Inc. (NASDAQ:BIOS), NanoString Technologies Inc (NASDAQ:NSTG), Secoo Holding Limited (NASDAQ:SECO), and Quanex Building Products Corporation (NYSE:NX). This group of stocks’ market valuations resemble LE’s market valuation.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| BIOS | 21 | 111803 | 3 |
| NSTG | 15 | 93473 | -1 |
| SECO | 2 | 10897 | -3 |
| NX | 16 | 42740 | 2 |
| Average | 13.5 | 64728 | 0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 13.5 hedge funds with bullish positions and the average amount invested in these stocks was $65 million. That figure was $90 million in LE’s case. BioScrip Inc. (NASDAQ:BIOS) is the most popular stock in this table. On the other hand Secoo Holding Limited (NASDAQ:SECO) is the least popular one with only 2 bullish hedge fund positions. Lands’ End, Inc. (NASDAQ:LE) is not the least popular stock in this group but hedge fund interest is still below average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. A small number of hedge funds were also right about betting on LE as the stock returned 31.9% and outperformed the market by an even larger margin.
Disclosure: None. This article was originally published at Insider Monkey.
