Lululemon Athletica inc. (NASDAQ:LULU) investors should know that the world’s most prominent hedge funds have turned a bit bullish on Lulu of late. With shares down 7.3% in the past 5 days, this news comes as a welcome sign for buyers. Yes, to the average investor, there are plenty of indicators shareholders can use to track publicly traded companies, but a couple of the most underrated are hedge fund and insider trading activity.
At Insider Monkey, our studies have shown that, historically, those who follow the top picks of the elite money managers can trounce the S&P 500 by a very impressive amount (see just how much).
Equally as important, optimistic insider trading activity is a second way to parse down the stock market universe. As the old adage goes: there are a number of stimuli for an executive to drop shares of his or her company, but just one, very clear reason why they would buy. Several academic studies have demonstrated the useful potential of this tactic if “monkeys” understand what to do (learn more here).
Now, let’s take a look at the key action surrounding Lululemon Athletica inc. (NASDAQ:LULU).
What have hedge funds been doing with Lululemon Athletica inc. (NASDAQ:LULU)?
At Q1’s end, a total of 22 of the hedge funds we track were bullish in this stock, a change of 5% from the second quarter. With the smart money’s sentiment swirling, there exists a few noteworthy hedge fund managers who were upping their holdings considerably.
According to our comprehensive database, Scout Capital Management, managed by James Crichton and Adam Weiss, holds the most valuable position in Lululemon Athletica inc. (NASDAQ:LULU). Scout Capital Management has a $95 million position in the stock, comprising 1.5% of its 13F portfolio. Coming in second is Patrick McCormack of Tiger Consumer Management, with a $86.9 million position; 3.1% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include Sanford J. Colen’s Apex Capital, and Louis Bacon’s Moore Global Investments.
As aggregate interest increased, key hedge funds have been driving this bullishness. Scout Capital Management, managed by James Crichton and Adam Weiss, established the biggest position in Lululemon Athletica inc. (NASDAQ:LULU). Scout Capital Management had 95 million invested in the company at the end of the quarter. Patrick McCormack’s Tiger Consumer Management also made a $86.9 million investment in the stock during the quarter. The other funds with brand new LULU positions are Sanford J. Colen’s Apex Capital, Ken Griffin’s Citadel Investment Group, and Louis Bacon’s Moore Global Investments.
Insider trading activity in Lululemon Athletica inc. (NASDAQ:LULU)
Insider trading activity, especially when it’s bullish, is most useful when the company we’re looking at has seen transactions within the past 180 days. Over the latest half-year time period, Lululemon Athletica inc. (NASDAQ:LULU) has experienced zero unique insiders buying, and 2 insider sales (see the details of insider trades here).
Let’s also take a look at hedge fund and insider activity in other stocks similar to Lululemon Athletica inc. (NASDAQ:LULU). These stocks are Carter’s, Inc. (NYSE:CRI), Hanesbrands Inc. (NYSE:HBI), Gildan Activewear Inc (USA) (NYSE:GIL), Under Armour Inc (NYSE:UA), and PVH Corp (NYSE:PVH). This group of stocks are in the textile – apparel clothing industry and their market caps resemble LULU’s market cap.
| Company Name | # of Hedge Funds | # of Insiders Buying | # of Insiders Selling |
| Carter’s, Inc. (NYSE:CRI) | 36 | 0 | 6 |
| Hanesbrands Inc. (NYSE:HBI) | 26 | 1 | 5 |
| Gildan Activewear Inc (USA) (NYSE:GIL) | 12 | 0 | 0 |
| Under Armour Inc (NYSE:UA) | 12 | 0 | 6 |
| PVH Corp (NYSE:PVH) | 36 | 0 | 10 |
With the results exhibited by Insider Monkey’s time-tested strategies, everyday investors must always watch hedge fund and insider trading activity, and Lululemon Athletica inc. (NASDAQ:LULU) shareholders fit into this picture quite nicely.
