Before we spend countless hours researching a company, we'd like to analyze what insiders, hedge funds and billionaire investors think of the stock first. We would like to do so because our research has shown that the elite investors' consensus returns have been exceptional. In the following paragraphs, we find out what the billionaire investors and hedge funds think of The Children's Place Inc. (NASDAQ:PLCE).
Is The Children's Place Inc. (NASDAQ:PLCE) a cheap investment now? Investors who are in the know are in a pessimistic mood. The number of bullish hedge fund bets went down by 4 lately. Our calculations also showed that PLCE isn't among the 30 most popular stocks among hedge funds.
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 flagship best performing hedge funds strategy returned 20.7% year to date (through March 12th) and outperformed the market even though it draws its stock picks among small-cap stocks. This strategy also outperformed the market by 32 percentage points since its inception (see the details here). That's why we believe hedge fund sentiment is a useful indicator that investors should pay attention to.
Let's take a gander at the recent hedge fund action surrounding The Children's Place Inc. (NASDAQ:PLCE).
What have hedge funds been doing with The Children's Place Inc. (NASDAQ:PLCE)?
Heading into the first quarter of 2019, a total of 19 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of -17% from one quarter earlier. The graph below displays the number of hedge funds with bullish position in PLCE over the last 14 quarters. So, let's find out which hedge funds were among the top holders of the stock and which hedge funds were making big moves.
Of the funds tracked by Insider Monkey, Royce & Associates, managed by Chuck Royce, holds the biggest position in The Children's Place Inc. (NASDAQ:PLCE). Royce & Associates has a $45.1 million position in the stock, comprising 0.4% of its 13F portfolio. The second most bullish fund manager is Marshall Wace LLP, managed by Paul Marshall and Ian Wace, which holds a $27.1 million position; 0.3% of its 13F portfolio is allocated to the stock. Other members of the smart money with similar optimism comprise David Keidan's Buckingham Capital Management, Lee Ainslie's Maverick Capital and Jim Simons's Renaissance Technologies.
Due to the fact that The Children's Place Inc. (NASDAQ:PLCE) has experienced declining sentiment from the entirety of the hedge funds we track, it's safe to say that there exists a select few money managers that decided to sell off their entire stakes last quarter. Intriguingly, Andreas Halvorsen's Viking Global sold off the biggest stake of all the hedgies monitored by Insider Monkey, totaling close to $69.9 million in stock, and Dmitry Balyasny's Balyasny Asset Management was right behind this move, as the fund dumped about $19.7 million worth. These moves are intriguing to say the least, as total hedge fund interest dropped by 4 funds last quarter.
Let's check out hedge fund activity in other stocks - not necessarily in the same industry as The Children's Place Inc. (NASDAQ:PLCE) but similarly valued. These stocks are SPS Commerce, Inc. (NASDAQ:SPSC), SSR Mining Inc. (NASDAQ:SSRM), Callaway Golf Company (NYSE:ELY), and Insight Enterprises, Inc. (NASDAQ:NSIT). All of these stocks' market caps are similar to PLCE's market cap.
[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position SPSC,19,147963,0 SSRM,12,110639,4 ELY,23,138979,-4 NSIT,21,93922,-1 Average,18.75,122876,-0.25 [/table]
View table here if you experience formatting issues.
As you can see these stocks had an average of 18.75 hedge funds with bullish positions and the average amount invested in these stocks was $123 million. That figure was $169 million in PLCE's case. Callaway Golf Company (NYSE:ELY) is the most popular stock in this table. On the other hand SSR Mining Inc. (NASDAQ:SSRM) is the least popular one with only 12 bullish hedge fund positions. The Children's Place Inc. (NASDAQ:PLCE) is not the most popular stock in this group but hedge fund interest is still above average. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Hedge funds were also right about betting on PLCE, though not to the same extent, as the stock returned 19.4% and outperformed the market as well.
Disclosure: None. This article was originally published at Insider Monkey.