Lululemon Athletica inc. (LULU): Are Hedge Funds Right About This Stock?

Lululemon Athletica inc. (NASDAQ:LULU) shareholders have witnessed a decrease in support from the world’s most elite money managers in recent months.

In the 21st century investor’s toolkit, there are plenty of indicators market participants can use to track their holdings. Two of the most useful are hedge fund and insider trading movement. At Insider Monkey, our research analyses have shown that, historically, those who follow the best picks of the best fund managers can trounce their index-focused peers by a solid amount (see just how much).

Just as beneficial, bullish insider trading activity is another way to break down the financial markets. Just as you’d expect, there are plenty of stimuli for a bullish insider to get rid of shares of his or her company, but just one, very obvious reason why they would behave bullishly. Many academic studies have demonstrated the valuable potential of this method if investors understand what to do (learn more here).

With these “truths” under our belt, let’s take a gander at the latest action encompassing Lululemon Athletica inc. (NASDAQ:LULU).

What does the smart money think about Lululemon Athletica inc. (NASDAQ:LULU)?

At Q1’s end, a total of 21 of the hedge funds we track held long positions in this stock, a change of 0% from the previous quarter. With hedge funds’ positions undergoing their usual ebb and flow, there exists a select group of noteworthy hedge fund managers who were upping their stakes significantly.

When looking at the hedgies we track, Stephen Mandel’s Lone Pine Capital had the biggest position in Lululemon Athletica inc. (NASDAQ:LULU), worth close to $335.1 million, accounting for 1.7% of its total 13F portfolio. The second largest stake is held by James Crichton and Adam Weiss of Scout Capital Management, with a $120 million position; 1.5% of its 13F portfolio is allocated to the company. Remaining hedgies that hold long positions include Chase Coleman and Feroz Dewan’s Tiger Global Management LLC, Patrick McCormack’s Tiger Consumer Management and Sanford J. Colen’s Apex Capital.

Since Lululemon Athletica inc. (NASDAQ:LULU) has witnessed falling interest from the entirety of the hedge funds we track, it’s easy to see that there lies a certain “tier” of fund managers who were dropping their entire stakes at the end of the first quarter. At the top of the heap, David Stemerman’s Conatus Capital Management said goodbye to the biggest position of all the hedgies we key on, totaling about $67.4 million in stock.. Donald Chiboucis’s fund, Columbus Circle Investors, also sold off its stock, about $43.6 million worth. These bearish behaviors are intriguing to say the least, as total hedge fund interest stayed the same (this is a bearish signal in our experience).

What do corporate executives and insiders think about Lululemon Athletica inc. (NASDAQ:LULU)?

Insider buying is most useful when the company we’re looking at has seen transactions within the past half-year. Over the last six-month time period, Lululemon Athletica inc. (NASDAQ:LULU) has experienced zero unique insiders purchasing, and 5 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.

With the returns demonstrated by Insider Monkey’s strategies, retail investors should always watch hedge fund and insider trading sentiment, and Lululemon Athletica inc. (NASDAQ:LULU) is an important part of this process.

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