Hedge funds are not perfect. They have their bad picks just like everyone else. Facebook, a stock hedge funds have loved dearly, lost nearly 40% of its value at one point in 2018. Although hedge funds are not perfect, their consensus picks do deliver solid returns, however. Our data show the top 20 S&P 500 stocks among hedge funds beat the S&P 500 Index by more than 6 percentage points so far in 2019. Because hedge funds have a lot of resources and their consensus picks do well, we pay attention to what they think. In this article, we analyze what the elite funds think of Zumiez Inc. (NASDAQ:ZUMZ).
Is Zumiez Inc. (NASDAQ:ZUMZ) worth your attention right now? Money managers are in an optimistic mood. The number of bullish hedge fund positions rose by 1 lately. Our calculations also showed that ZUMZ isn’t among the 30 most popular stocks among hedge funds. ZUMZ was in 13 hedge funds’ portfolios at the end of the first quarter of 2019. There were 12 hedge funds in our database with ZUMZ holdings at the end of the previous quarter.
Hedge funds’ reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn’t keep up with the unhedged returns of the market indices. Our research has shown that hedge funds’ small-cap stock picks managed to beat the market by double digits annually between 1999 and 2016, but the margin of outperformance has been declining in recent years. Nevertheless, we were still able to identify in advance a select group of hedge fund holdings that outperformed the market by 40 percentage points since May 2014 through May 30, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that underperformed the market by 10 percentage points annually between 2006 and 2017. Interestingly the margin of underperformance of these stocks has been increasing in recent years. Investors who are long the market and short these stocks would have returned more than 27% annually between 2015 and 2017. We have been tracking and sharing the list of these stocks since February 2017 in our quarterly newsletter.
We’re going to take a look at the fresh hedge fund action encompassing Zumiez Inc. (NASDAQ:ZUMZ).
What have hedge funds been doing with Zumiez Inc. (NASDAQ:ZUMZ)?
At Q1’s end, a total of 13 of the hedge funds tracked by Insider Monkey were long this stock, a change of 8% from one quarter earlier. On the other hand, there were a total of 18 hedge funds with a bullish position in ZUMZ 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, 0 held the most valuable stake in Zumiez Inc. (NASDAQ:ZUMZ), which was worth $9.9 million at the end of the first quarter. On the second spot was AQR Capital Management which amassed $6.9 million worth of shares. Moreover, Maverick Capital, Arrowstreet Capital, and Balyasny Asset Management were also bullish on Zumiez Inc. (NASDAQ:ZUMZ), allocating a large percentage of their portfolios to this stock.
As industrywide interest jumped, key hedge funds have been driving this bullishness. Maverick Capital, managed by Lee Ainslie, assembled the most outsized position in Zumiez Inc. (NASDAQ:ZUMZ). Maverick Capital had $6.6 million invested in the company at the end of the quarter. Steve Cohen’s Point72 Asset Management also made a $1.3 million investment in the stock during the quarter. The other funds with brand new ZUMZ positions are John Overdeck and David Siegel’s Two Sigma Advisors, David Harding’s Winton Capital Management, and Matthew Hulsizer’s PEAK6 Capital Management.
Let’s now review 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 New Media Investment Group Inc (NYSE:NEWM), Photronics, Inc. (NASDAQ:PLAB), Kura Oncology, Inc. (NASDAQ:KURA), and Acorda Therapeutics Inc (NASDAQ:ACOR). All of these stocks’ market caps are closest to ZUMZ’s market cap.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| NEWM | 17 | 48309 | 0 |
| PLAB | 13 | 67607 | -3 |
| KURA | 17 | 207125 | 2 |
| ACOR | 22 | 161061 | 0 |
| Average | 17.25 | 121026 | -0.25 |
View table here if you experience formatting issues.
As you can see these stocks had an average of 17.25 hedge funds with bullish positions and the average amount invested in these stocks was $121 million. That figure was $34 million in ZUMZ’s case. Acorda Therapeutics Inc (NASDAQ:ACOR) is the most popular stock in this table. On the other hand Photronics, Inc. (NASDAQ:PLAB) is the least popular one with only 13 bullish hedge fund positions. Compared to these stocks Zumiez Inc. (NASDAQ:ZUMZ) is even less popular than PLAB. Hedge funds dodged a bullet by taking a bearish stance towards ZUMZ. Our calculations showed that the top 20 most popular hedge fund stocks returned 6.2% in Q2 through June 19th and outperformed the S&P 500 ETF (SPY) by nearly 3 percentage points. Unfortunately ZUMZ wasn’t nearly as popular as these 20 stocks (hedge fund sentiment was very bearish); ZUMZ investors were disappointed as the stock returned 0.2% during the same time frame and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 20 most popular stocks among hedge funds as 13 of these stocks already outperformed the market so far in the second quarter.
Disclosure: None. This article was originally published at Insider Monkey.
