Insider Monkey has processed numerous 13F filings of hedge funds and successful value investors to create an extensive database of hedge fund holdings. The 13F filings show the hedge funds’ and successful investors’ positions as of the end of the first quarter. You can find articles about an individual hedge fund’s trades on numerous financial news websites. However, in this article we will take a look at their collective moves over the last 4.5 years and analyze what the smart money thinks of Steven Madden, Ltd. (NASDAQ:SHOO) based on that data.
Steven Madden, Ltd. (NASDAQ:SHOO) investors should pay attention to a decrease in activity from the world’s largest hedge funds lately. SHOO was in 18 hedge funds’ portfolios at the end of the first quarter of 2020. There were 22 hedge funds in our database with SHOO holdings at the end of the previous quarter. Our calculations also showed that SHOO isn’t among the 30 most popular stocks among hedge funds (click for Q1 rankings and see the video for a quick look at the top 5 stocks).
Video: Watch our video about the top 5 most popular hedge fund stocks.
In the financial world there are a large number of tools investors have at their disposal to grade stocks. A pair of the most under-the-radar tools are hedge fund and insider trading indicators. We have shown that, historically, those who follow the top picks of the best fund managers can outperform the broader indices by a solid amount. Insider Monkey’s monthly stock picks returned 101% since March 2017 and outperformed the S&P 500 ETFs by more than 58 percentage points. Our short strategy outperformed the S&P 500 short ETFs by 20 percentage points annually (see the details here). That’s why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Lee Ainslie of Maverick Capital
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. We interview hedge fund managers and ask them about their best ideas. If you want to find out the best healthcare stock to buy right now, you can watch our latest hedge fund manager interview here. We read hedge fund investor letters and listen to stock pitches at hedge fund conferences. Our best call in 2020 was shorting the market when the S&P 500 was trading at 3150 after realizing the coronavirus pandemic’s significance before most investors. Now let’s review the key hedge fund action encompassing Steven Madden, Ltd. (NASDAQ:SHOO).
What does smart money think about Steven Madden, Ltd. (NASDAQ:SHOO)?
At the end of the first quarter, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -18% from one quarter earlier. By comparison, 18 hedge funds held shares or bullish call options in SHOO a year ago. So, let’s find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Among these funds, Renaissance Technologies held the most valuable stake in Steven Madden, Ltd. (NASDAQ:SHOO), which was worth $17.4 million at the end of the third quarter. On the second spot was Citadel Investment Group which amassed $10.2 million worth of shares. Arrowstreet Capital, Millennium Management, and Gotham Asset 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 Zebra Capital Management allocated the biggest weight to Steven Madden, Ltd. (NASDAQ:SHOO), around 1.07% of its 13F portfolio. Neo Ivy Capital is also relatively very bullish on the stock, dishing out 0.54 percent of its 13F equity portfolio to SHOO.
Due to the fact that Steven Madden, Ltd. (NASDAQ:SHOO) has faced a decline in interest from hedge fund managers, logic holds that there were a few hedge funds that slashed their entire stakes heading into Q4. Intriguingly, Donald Sussman’s Paloma Partners cut the largest stake of the “upper crust” of funds followed by Insider Monkey, comprising close to $1.9 million in stock, and Michael Gelband’s ExodusPoint Capital was right behind this move, as the fund said goodbye to about $1.6 million worth. These transactions are intriguing to say the least, as aggregate hedge fund interest fell by 4 funds heading into Q4.
Let’s now take a look at hedge fund activity in other stocks similar to Steven Madden, Ltd. (NASDAQ:SHOO). We will take a look at Varonis Systems Inc (NASDAQ:VRNS), TFI International Inc. (NYSE:TFII), Outfront Media Inc (NYSE:OUT), and Cornerstone OnDemand, Inc. (NASDAQ:CSOD). All of these stocks’ market caps are similar to SHOO’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| VRNS | 20 | 387926 | 2 |
| TFII | 12 | 41372 | 12 |
| OUT | 30 | 329476 | -1 |
| CSOD | 24 | 505400 | -5 |
| Average | 21.5 | 316044 | 2 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 21.5 hedge funds with bullish positions and the average amount invested in these stocks was $316 million. That figure was $59 million in SHOO’s case. Outfront Media Inc (NYSE:OUT) is the most popular stock in this table. On the other hand TFI International Inc. (NYSE:TFII) is the least popular one with only 12 bullish hedge fund positions. Steven Madden, Ltd. (NASDAQ:SHOO) 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. Our calculations showed that top 10 most popular stocks among hedge funds returned 41.4% in 2019 and outperformed the S&P 500 ETF (SPY) by 10.1 percentage points. These stocks gained 13.4% in 2020 through June 22nd and surpassed the market by 15.9 percentage points. Unfortunately SHOO wasn’t nearly as popular as these 10 stocks (hedge fund sentiment was quite bearish); SHOO investors were disappointed as the stock returned 0.4% during the second 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 10 most popular stocks among hedge funds as most of these stocks already outperformed the market in 2020.
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Disclosure: None. This article was originally published at Insider Monkey.
