Should You Avoid G-III Apparel Group, Ltd. (GIII)?

As we already know from media reports and hedge fund investor letters, many hedge funds lost money in the third quarter, blaming macroeconomic conditions and unpredictable events that hit several sectors, with healthcare among them. Nevertheless, most investors decided to stick to their bullish theses and their long-term focus allows us to profit from the recent declines. In particular, let’s take a look at what hedge funds think about G-III Apparel Group, Ltd. (NASDAQ:GIII) in this article.

Is G-III Apparel Group, Ltd. (NASDAQ:GIII) a buy, sell, or hold? Hedge funds are becoming less hopeful. The number of bullish hedge fund positions fell by 1 in recent months. At the end of this article we will also compare GIII to other stocks, including Mercury General Corporation (NYSE:MCY), Deluxe Corporation (NYSE:DLX), and Emcor Group Inc (NYSE:EME) to get a better sense of its popularity.

To most shareholders, hedge funds are viewed as unimportant, old investment tools of yesteryear. While there are greater than an 8000 funds with their doors open at the moment, We choose to focus on the masters of this group, about 700 funds. These hedge fund managers have their hands on the majority of all hedge funds’ total capital, and by shadowing their highest performing equity investments, Insider Monkey has formulated several investment strategies that have historically beaten Mr. Market. Insider Monkey’s small-cap hedge fund strategy outpaced the S&P 500 index by 12 percentage points annually for a decade in their back tests.

Keeping this in mind, we’re going to check out the recent action regarding G-III Apparel Group, Ltd. (NASDAQ:GIII).

How are hedge funds trading G-III Apparel Group, Ltd. (NASDAQ:GIII)?

At Q3’s end, a total of 18 of the hedge funds tracked by Insider Monkey held long positions in this stock, down by 5% from the second quarter. With hedgies’ positions undergoing their usual ebb and flow, there exists a select group of notable hedge fund managers who were boosting their holdings considerably (or already accumulated large positions).

According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Clifford Fox’s Columbus Circle Investors has the most valuable position in G-III Apparel Group, Ltd. (NASDAQ:GIII), worth close to $69.9 million, amounting to 0.6% of its total 13F portfolio. Coming in second is Buckingham Capital Management, run by David Keidan, which holds a $40 million position; 3.6% of its 13F portfolio is allocated to the company. Some other hedge funds and institutional investors that are bullish encompass Israel Englander’s Millennium Management, Jim Simons’s Renaissance Technologies and Drew Cupps’s Cupps Capital Management.

Due to the fact that G-III Apparel Group, Ltd. (NASDAQ:GIII) has experienced bearish sentiment from hedge fund managers, logic holds that there lies a certain “tier” of hedge funds that decided to sell off their positions entirely by the end of the third quarter. It’s worth mentioning that Chuck Royce’s Royce & Associates dropped the biggest position of the 700 funds tracked by Insider Monkey, comprising an estimated $19.5 million in stock, and Ken Heebner’s Capital Growth Management was right behind this move, as the fund dumped about $12 million worth of GIII shares. These moves are intriguing to say the least, as aggregate hedge fund interest dropped by 1 fund by the end of the third quarter.

Let’s now review hedge fund activity in other stocks – not necessarily in the same industry as G-III Apparel Group, Ltd. (NASDAQ:GIII) but similarly valued. We will take a look at Mercury General Corporation (NYSE:MCY), Deluxe Corporation (NYSE:DLX), Emcor Group Inc (NYSE:EME), and Rayonier Inc. (NYSE:RYN). This group of stocks’ market caps match GIII’s market cap.

As you can see these stocks had an average of 18 hedge funds with bullish positions and the average amount invested in these stocks was $201 million. That figure was $178 million in GIII’s case. Deluxe Corporation (NYSE:DLX) is the most popular stock in this table. On the other hand Mercury General Corporation (NYSE:MCY) is the least popular one with only 8 bullish hedge fund positions. G-III Apparel Group, Ltd. (NASDAQ:GIII) is not the most popular stock in this group, but hedge fund interest is still above average. This is a slightly positive signal, but we’d rather spend our time researching stocks that hedge funds are piling on. In this regard DLX might be a better candidate to consider a long position.