How Zumiez Inc. (ZUMZ) Stacks Up Against Its Peers

It seems that the masses and most of the financial media hate hedge funds and what they do, but why is this hatred of hedge funds so prominent? At the end of the day, these asset management firms do not gamble the hard-earned money of the people who are on the edge of poverty. Truth be told, most hedge fund managers and other smaller players within this industry are very smart and skilled investors. Of course, they may also make wrong bets in some instances, but no one knows what the future holds and how market participants will react to the bountiful news that floods in each day. The S&P 500 Index gained 7.6% in the 12 month-period that ended November 21, while less than 49% of its stocks beat the benchmark. In contrast, the 30 most popular mid-cap stocks among the top hedge fund investors tracked by the Insider Monkey team returned 18% over the same period, which provides evidence that these money managers do have great stock picking abilities. That’s why we believe it isn’t a waste of time to check out hedge fund sentiment before you invest in a stock like Zumiez Inc. (NASDAQ:ZUMZ) .

Zumiez Inc. (NASDAQ:ZUMZ) shareholders have witnessed an increase in activity from the world’s largest hedge funds lately. There were 5 hedge funds in our database with ZUMZ holdings at the end of the previous quarter. At the end of this article we will also compare ZUMZ to other stocks including Peoples Bancorp Inc. (NASDAQ:PEBO), Sorrentto Therapeutics Inc (NASDAQ:SRNE), and Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) to get a better sense of its popularity.

We care about hedge fund sentiment because historically hedge funds’ stock picks delivered strong risk adjusted returns. There are certain segments of the market where hedge funds’ stock picks performed much better than its benchmarks. For instance, the 30 most popular mid-cap stocks among the best performing hedge funds returned 18% over the last 12 months outpacing S&P 500 Index by more than 10 percentage points. We developed this strategy 2.5 years ago and started sharing its picks in our quarterly newsletter. It bested the S&P 500 Index ETFs by delivering a solid 39% vs. 22% gain for its benchmarks.

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Keeping this in mind, we’re going to review the new action encompassing Zumiez Inc. (NASDAQ:ZUMZ).

How have hedgies been trading Zumiez Inc. (NASDAQ:ZUMZ)?

At Q3’s end, a total of 6 of the hedge funds tracked by Insider Monkey were long this stock, a gain of 20% from the previous quarter. On the other hand, there were a total of 7 hedge funds with a bullish position in ZUMZ at the beginning of this year. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Point72 Asset Management, led by Steve Cohen, holds the most valuable position in Zumiez Inc. (NASDAQ:ZUMZ). Point72 Asset Management has a $8.1 million position in the stock. Sitting at the No. 2 spot is Coe Capital Management, led by Mark Coe, which holds a $2.5 million position. Remaining professional money managers that are bullish contain Richard Chilton’s Chilton Investment Company, John Tompkins’ Tyvor Capital and D. E. Shaw’s D E Shaw, one of the largest hedge funds in the world. We should note that none of these hedge funds are among our list of the 100 best performing hedge funds which is based on the performance of their 13F long positions in non-microcap stocks.

Now, some big names were breaking ground themselves. Coe Capital Management created the largest position in Zumiez Inc. (NASDAQ:ZUMZ).  Tyvor Capital also made a $1.8 million investment in the stock during the quarter. The other funds with brand new ZUMZ positions are D E Shaw and Benjamin A. Smith’s Laurion Capital Management.

Let’s also examine hedge fund activity in other stocks – not necessarily in the same industry as Zumiez Inc. (NASDAQ:ZUMZ) but similarly valued. We will take a look at Peoples Bancorp Inc. (NASDAQ:PEBO), Sorrentto Therapeutics Inc (NASDAQ:SRNE), Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX), and Oriental Financial Group Inc. (NYSE:OFG). This group of stocks’ market valuations are closest to ZUMZ’s market valuation.

As you can see these stocks had an average of 9 hedge funds with bullish positions and the average amount invested in these stocks was $51 million. That figure was $15 million in ZUMZ’s case. Progenics Pharmaceuticals, Inc. (NASDAQ:PGNX) is the most popular stock in this table. On the other hand Peoples Bancorp Inc. (NASDAQ:PEBO) is the least popular one with only 4 bullish hedge fund positions. Zumiez Inc. (NASDAQ:ZUMZ) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we’d rather spend our time researching stocks that hedge funds are piling on. In this regard PGNX might be a better candidate to consider taking a long position in.