Chico’s FAS, Inc. (NYSE:CHS)’s shares have retreated by more than 3% out of the gate after the company’s first-quarter results came in below expectations. For the period, Chico’s FAS posted a net income of $0.25 per share on sales of $643 million, missing estimates by $0.06 per share and $24.86 million. Sales declined by 7.9% year-over-year due to a 4.2% drop in comparable sales and 15 net store closures. The gross margin was 40.8% versus 42.4% in last year’s first quarter. The company bought $36.6 million worth of its own shares back in the quarter, however. Management is trying to right the ship by increasing efficiency and reducing costs.
Is Chico’s FAS, Inc. (NYSE:CHS) a healthy stock for your portfolio? The best stock pickers are getting more optimistic and the number of long hedge fund positions improved by three in recent months. In this way, CHS was in the equity portfolios of 25 hedge funds tracked by Insider Monkey at the end of the first quarter of 2016. However, the level and the change in hedge fund popularity aren’t the only variables you need to analyze to decipher hedge funds’ perspectives. A stock may witness a boost in popularity, but it may still be less popular than similarly priced stocks. That’s why at the end of this article we will examine companies such as TESARO Inc (NASDAQ:TSRO), Express, Inc. (NYSE:EXPR), and Diplomat Pharmacy Inc (NYSE:DPLO) to gather more data points.
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Today there are numerous signals investors employ to size up stocks. A duo of the most under-the-radar signals are hedge fund and insider trading activity. We have shown that, historically, those who follow the top picks of the top fund managers can trounce their index-focused peers by a superb margin (see the details here).
According to publicly available hedge fund and institutional investor holdings data compiled by Insider Monkey, Blue Harbour Group, managed by Clifton S. Robbins, holds the most valuable position in Chico’s FAS, Inc. (NYSE:CHS). Blue Harbour Group has a $54.2 million position in the stock, comprising 1.8% of its 13F portfolio. Coming in second is Jim Simons’ Renaissance Technologies, which holds a $51.6 million position; 0.1% of its 13F portfolio is allocated to the stock. Some other peers with similar optimism consist of Ken Griffin’s Citadel Investment Group, David E. Shaw’s D E Shaw and Cliff Asness’s AQR Capital Management.
As industry-wide interest jumped, key hedge funds have been driving this bullishness. Point72 Asset Management, managed by Steve Cohen, assembled the most valuable position in Chico’s FAS, Inc. (NYSE:CHS). Point72 Asset Management had $12.3 million invested in the company at the end of the quarter. James A. Mitarotonda’s Barington Capital Group also initiated a $10.5 million position during the quarter. The other funds with new positions in the stock are John Tompkins’s Tyvor Capital, Neil Chriss’s Hutchin Hill Capital, and Gregg Moskowitz’s Interval Partners.
Let’s check out hedge fund activity in other stocks – not necessarily in the same industry as Chico’s FAS, Inc. (NYSE:CHS) but similarly valued. We will take a look at TESARO Inc (NASDAQ:TSRO), Express, Inc. (NYSE:EXPR), Diplomat Pharmacy Inc (NYSE:DPLO), and RBC Bearings Incorporated (NASDAQ:ROLL). This group of stocks’ market values resemble CHS’s market value.
| Ticker | No of HFs with positions | Total Value of HF Positions (x1000) | Change in HF Position |
|---|---|---|---|
| TSRO | 19 | 281633 | 3 |
| EXPR | 34 | 244629 | 9 |
| DPLO | 12 | 60054 | -5 |
| ROLL | 4 | 72881 | -1 |
As you can see these stocks had an average of 17 hedge funds with bullish positions and the average amount invested in these stocks was $165 million. That figure was $257 million in CHS’s case. Express, Inc. (NYSE:EXPR) is the most popular stock in this table. On the other hand RBC Bearings Incorporated (NASDAQ:ROLL) is the least popular one with only four bullish hedge fund positions. Chico’s FAS, Inc. (NYSE:CHS) 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 EXPR might be a better candidate to consider a long position.
Disclosure: None
